Employees at a 24-hour call center walk back to their desks after a meeting in the company office in Bangalore. Global firms are drawn to talented, English-speaking and affordable labor on offer in Indian cities such as Bangalore, Hyderabad and New Delhi. (Photo: AFP)

When the U.S. Senate passed the $328 billion Omnibus Appropriations Bill (HR 2673) last week, it set off alarm bells and media rush in India. However, analysts note that the provision on outsourcing that is part of that budget Bill and goes to the President for signing, applies to a limited segment of Federal government work.

The language from the 455-page Appropriations Bill, that was passed in both House and Senate, is: “Section 647: Limitation on Conversion to Contractor Performance: (e) An activity or function of an executive agency that is converted to contractor performance under Office of Management and Budget Circular A-76 may not be performed by the contractor at a location outside the United States except to the extent that such activity or function was previously performed by Federal Government employees outside the United States.”

Last year, the Bush administration pushed tofederal jobs to competition, permitting private companies to bid for commercial aspects of work that was done by the government on grounds that privatization would result in efficiency and savings for the government.

The Office of Management and Budget (OMB) published a revised A-76 in May 2003, a regulation that governs the process ofng federal jobs to competitive sourcing (i.e.to private sector bidding). Labor groups contended it was the Bush administration’s effort to break the backs of unions of government employees. It was to this privatization effort that Sen. George Voinovich, Republican from Ohio, added a clause prohibiting private sector contractors who won contracts from moving any of the affected jobs overseas. While some aspects of work in some federal departments have been privatized since the revised A-76, there are differences of opinion on whether savings have been achieved. “According to my understanding, Senator Voinovich (R-Oh) put the amendment in so that recently privatized jobs cannot be shipped overseas, and I am just going by reports I’ve read,” Ron Hira, assistant professor of public policy, Rochester Institute of Public Policy, told News India-Times. Hira had testified at a hearing before the House Small Business Committee on June 18 and Oct. 20 last year.

In a factsheet regarding privatization and “competitive sourcing,” the American Federation of Government Employees (AFGE) noted: “According to impartial observers, savings are being overstated, there is no proof that anticipated savings are actually being realized, and agencies have no mechanisms in place for determining whether contracting out actually works.”

Ironically, when the Bush administration pushed for privatization, small businesses around the country, including those owned by Indian Americans, were hopeful of securing at least some of the estimated $70 billion worth of contracts for vendors, including $5 billion for information technology companies, if the estimated 900,000 jobs were outsourced by end of 2004, as the Bush administration wanted.

According to a September 2003 report on “Competitive Sourcing,” the White House estimated that, “While a majority of agencies identified somewhere between 10 to 40 percent of their total workforce inventory as available for competition, several agencies reported more than 50 percent while a few identified less than 5 percent as available for competition.”

What the latest outsourcing provision in the Appropriations Bill did was to restrict private companies that had taken over the work of those parts of the federal government that had been recently privatized, from subcontracting work to foreign workers.

This is seen as affecting a relatively small part of jobs in the federal government. Perhaps that explains why the hue and cry was greater in India and the anti-outsourcing advocates in the U.S. were not jumping for joy at their victory.

“I was at a retreat with Congressional staffers when the Bill was passed and people were confused about the effects of the provision on outsourcing,” Hira said. “To put the matter in perspective one would have to look at how many jobs have really been privatized through A-76 as compared to overall federal contracting. My understanding is that it covers jobs that have been privatized through OMB ---- that’s a very small part of federal contracting,” Hira said, but emphasized that the effects have yet to be measured.