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Home / Washington Business - September/October 2005 / Points of View: Outsourcing or Outforcing? |
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Points of View: Outsourcing or Outforcing? |
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Written On: September/October 2005 |
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Written By: by Sen. Jim Honeyford, R-Sunnyside |
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This year, with passage of Senate Bill 8407, the Legislature was tasked to study the issue of state government outsourcing. The group of lawmakers assigned to this task is scheduled to meet in September to begin its work.
The issue of state government outsourcing has become, to some, one of the evils of our time. Others see it as a positive way for government to save taxpayers' money and perhaps use those savings to provide other much-needed services. Whatever your view, the issue of outsourcing has been strong on rhetoric and passion, but short on an objective examination of its pros and cons.
That examination is the role of this task force. We must move forward with careful determination to find out if there really is a problem. We must also answer several questions that will help us develop the best public policy around this issue. Some of those questions include:
• What exactly do we mean by “state government outsourcing”? Many people think of it as contracting with the private sector to perform services for which the state is accountable. But there are still questions to be answered within the scope of the group's work. For example, will we look strictly at companies that contract directly with state government, or also at those companies' subcontractors? Will we look only at outsourcing to other countries (sometimes called offshoring), or include outsourcing to other states?
• What exactly is the current level of outsourcing within state government, and in what areas is it most often practiced?
• How much money does the state save by outsourcing those services?
• If the state restricts or removes the ability to outsource, how will we pay the increased costs?
• Are there companies and individuals here in Washington with the skills to do the jobs currently being outsourced? If not, why not, and what could we do to change that?
But there is one more very big question we must answer. When the Senate was considering the legislation authorizing this study, I introduced an amendment to make sure the group answers this question as well: Why do businesses that contract with the state feel the need to go out of the state or the country to hire people? This question goes to the heart of our state's business climate. We must determine whether our state has policies in place that force businesses to locate and grow elsewhere.
Washington's often unfriendly business climate is an issue our employers know all too well. We have the highest minimum wage in the country, and industrial insurance costs are sky high. Last session the Legislature passed a bill that unraveled key unemployment insurance reforms, leaving us again with one of the most expensive unemployment insurance systems nationwide. As part of our study of outsourcing, we simply must know: Are our unfriendly business practices forcing the state — or companies that contract with the state — to look for workers elsewhere?
This is more than just a Washington issue. According to the McKinsey Global Institute, U.S. companies save 58 cents on every dollar of spending that moves offshore. How can we turn that around? This practice, sometimes called "outforcing," must be one of the key elements we examine in any study of state outsourcing.
For some people, outsourcing is a very personal issue. The pain experienced by individuals and families whose jobs have been outsourced is very real. But I hope the task force might find new ways to use outsourcing's benefits and savings to provide help to those who have lost their livelihoods.
I look forward to working with my fellow lawmakers to study the issue of state outsourcing. We may find it's not a problem at all, and that outsourcing is providing us with valuable cost savings. Or, we may find we have changes to make. Either way, we should resist proposing solutions before we answer the big questions before us.
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