The Telegraph
Since 1st March, 1999
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US senate to begin hearing on TCS deal

New York, Nov. 30 (PTI): The Indiana State Senate plans to hold a hearing from tomorrow on why a $15.2 million outsourcing contract was awarded to Tata Consultancy Services’ American subsidiary to upgrade state computers processing unemployment claims.

The probe, which comes amid mounting backlash against outsourcing in the US, will also look into a bill that would require service contracts entered into by a state agency to specify that only American citizens and those authorised to work in the US — green card holders — can be hired.

This follows state governor Joe Kernan’s decision this week to terminate the four-year contract awarded to Tata Consultancy Services. Kernan’s predecessor Frank ’bannon had, however, cleared the contract weeks before his sudden death on September 13.

Senator Jeff Drozda, who had proposed the bill that will require all state-related work to be done by US citizens, said: “I want to send a message to other states” engaged in outsourcing and awarding of work contracts to foreign companies.

The bill is expected to be taken up by the state legislature’s economic development and technology committee in January and its outcome would be closely watched by different states, which are under pressure to enact similar legislation as are countries engaged in outsourcing work, including India.

Kernan, a Democratic candidate for the governor’s post in next year’s election, had come under strong criticism over outsourcing from his possible Republican rival and had announced that under a new programme, Indiana companies would get help in bidding on contracts.

Dubbed “Opportunity Indiana”, the programme would involve reviewing the procedure of awarding state contracts and finding ways to help state companies compete for more government business.

On the cancellation of the deal with Tata Consultancy Services, Kernan said: “After having a chance to discuss our vision of how the state should do business and how we can provide better opportunities to Indiana companies and workers, we concluded that this contract did not fit in that framework. The procedures we had in place virtually knocked Indiana companies out of the running.”

He, however, stressed that his decision did not reflect on the firm’s ability to complete the job or any other shortcoming. “This is in no way saying the company was in error, but we believe... we have a responsibility to take a look at those things that will give us a chance to maximise opportunity for Indiana companies.”

The computer overhaul for which the company was hired had been approved as part of the Energize Indiana scheme, a 10-year plan — parts of which the legislature passed this year — to create 200,000 high-tech, high-wage jobs. As many as 65 contract employees were to work in the Indiana government centre alongside 18 state workers as part of the project.

Tata won the contract over two US-based companies — Accenture LLP and Deloitte Consulting LP — with a proposal that was $8.1 million to $23.3 million less than those of competitors, media report said.

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