Indiana Cancels Foreign Outsourcing ContractIndiana Cancels Foreign Outsourcing Contract

A firm in India that was hired to process unemployment benefits for the state of Indiana's has been dismissed, but the issue of foreign workers taking jobs from U.S. workers in the state is not over. Members of the state senate said they will open a probe about the issue beginning Monday.

"We're supposed to be helping unemployed and underemployed Hoosiers," state Sen. Jeff Drozda said in a statement. Drozda led the charge to overturn the contract.

What particularly incensed some opponents of the contract was the fact that the foreign firm was hired to process Indiana workers' unemployment claims--claims that could be submitted from workers who stood to lose their jobs due to the hiring of the foreign workers.

The termination of the contract, which had been awarded to a subsidiary of India's Tata Consultancy Services, was announced by Gov. Joseph Kernan.

At the same time, the governor unveiled a new program called "Opportunity Indiana," which will examine the state's procurement process with an eye to giving Indiana firms enhanced opportunities to successfully bid on state contracts. Drozda's examination is separate from the governor's.

The state had awarded the $15.4 million contract to Tata's U.S. subsidiary, TCS America, in a bidding competition with Accenture and Deloitte Consulting. Preliminary work had already begun, with plans to eventually employ 65 Tata employees working with 18 state employees in Indianapolis.

Tata is a visible symbol of the growing trend of U.S. companies that are outsourcing their IT operations to foreign workers. The majority of Tata's estimated $1 billion in annual revenue is said to come for its North American operations. Much of the outsourcing phenomenon involves moving actual operations offshore while the measure of putting foreign workers--most of them software specialists--to work wholesale in large numbers in U.S. facilities is somewhat newer and growing.

Dell said last week that some help-desk calls from U.S. companies no longer will be sent to its Bangalore, India, call center after some customers complained.