Posted on 12/29/2003 11:55:04 AM PST by Mini-14
A decision by the Washington State Health Care Authority to use offshore labor for a major IT project was based in part on some pretty simple arithmetic: The contractor's bid was about $3 million below the next lowest bid. But the project hasn't worked out as planned. It's running over budget, and an internal state document written in October warns of a "significant risk" that it won't meet the agency's requirements. The project has also prompted state legislation that would effectively bar state agencies from future use of offshore contractors. "I don't think that Washington state tax dollars should be used to create jobs overseas, when we've got skilled workers here," said State Rep. Zack Hudgins, a Democrat. When the Washington Legislature reconvenes next month, Hudgins plans to introduce a bill that would block the state from sending work offshore. "I think we may save money in the short term by going to our lowest bidder," Hudgins said. "But in the long term, we undermine our communities, our job base, our tax base." Similar bills restricting government offshore work are under consideration in New Jersey, Michigan, North Carolina and Indiana. Indiana made headlines recently when a state jobs agency signed a deal that could have brought in Indian coders [QuickLink 42838]. Tom Neitzel, the health care agency's IT manager, said that while he's aware of the political implications of the bid award, his agency has to make decisions based on a project's business case, not on where the work is performed. "There are very emotional issues associated with offshore contracting," he said. The winning bid of approximately $3 million by Healthaxis Inc. -- the Irving, Texas-based prime contractor that has been working with India-based outsourcer Satyam Computer Services Ltd. -- was the only bid to come in under the $3.6 million budget set by the legislature for building a new insurance benefits administration system. Written proposals were received from PeopleSoft Inc., Oracle Corp. and Physmark Inc., and Deloitte Touche Tohmatsu. The savings came chiefly from reduced salary costs, said Neitzel. For instance, Healthaxis listed per-hour rates for programmers at $34; other bidders' rates started at $178. The contract, which was set at about $2.6 million after the state agency decided to take responsibility for purchasing the systems hardware, was signed in May 2002 with the expectation that the system would be in place by the end of June 2003. That deadline has been moved to next June. But the delay is costing the agency about $1.4 million in maintenance and support costs for running its health benefits applications on a system hosted by another state agency, said Neitzel. That's money the Washington State Health Care Authority didn't expect to be paying. Healthaxis isn't seeking additional money and has so far been paid just $930,000. Neitzel said it's to the firm's credit that it's sticking with its contracted cost. The project's problems were revealed last week by the Seattle-based Washington Alliance of Technology Workers, which obtained state documents about the project and posted a detailed account about it on its Web site [QuickLink a3910]. The documents list problems with testing and design quality, as well as usability. In interviews, both sides cited issues with the project's requirements that may not have been evident at the outset. "This project was more than what both parties had anticipated," said Neitzel. "This has been a large, complex project," echoed Emry Sisson, executive vice president of technology and operations at Healthaxis, who noted that this is his company's first project for a state government. "We maintain a good relationship with the state, and we are committed to delivering and meeting their systems needs. We remain convinced that we will be able to deliver the system." Although Neitzel doesn't blame offshore workers for the delay, he said there have been problems. While the workers have technical skills, they don't have insurance subject-matter expertise, he said. And that has affected testing. Satyam spokesman Abhijit Roy said the company has sufficient experience and has "time and again demonstrated its business knowledge. "Understanding unique and business-specific requirements on a project of this magnitude is not something that would be different for offshore vs. onshore technical personnel," said Roy. But Stan Lepeak, an analyst at Stamford, Conn.-based Meta Group Inc., said concern about the business knowledge of offshore companies is a common complaint, especially as offshore firms increasingly take on more complex projects. Gaining that business knowledge "is a major challenge for them" and may lead to more acquisitions -- both in the U.S. and among overseas companies -- as they seek to add depth to their skills. Asked what he's learned from the project, Neitzel said, "I would be certain that clear requirements, written requirements, are developed and agreed upon. Make sure that clear deliverable dates are documented and agreed upon by all. Assume nothing. That is what I am learning here, and it is being reinforced." As for the effects of outsourcing the project, "I could have had the same thing happening if everybody had been based in Dallas," Neitzel said.
Just F.Y.I. -- that wave has crested, and is now subsiding. It turns out I had no trouble competing with them. It turns out, there's about a 98% failure rate of all projects sent overseas. I worked in Project Control, don't forget.
As usual, when you see something in the mainstream press, that means it's *very* old news.
It's literally to the point that I *welcome* my competitors announcements of attempting to move some jobs off-shore. That is good news for me.
Wow -- you actually said that?
The mainstream media . . . OBJECTIVE!?
So, it appears you'd say just about anything, make up any thing you had to, just to insult people who disagree with you. That statement is quite a whopper. And quite pathetic.
Happy New Year.
Using 'news' and 'objective' in the same sentence, here on FR?
Not to mention, suggesting that a *reporter* is more accurate than an first-hand eye-witness . . .
Oy vey. You'd clearly say anything in your desperate need to insult others.
I put in 7 years with Project Control, where it was part of my job to gather information and metrics on all our division's projects. Several of those have attempted to use off-shore assets. In almost every case, it was a total failure and in most of those cases the work came back on-shore. In several cases, to me.
Oh, I'm sorry, I forgot -- you aren't interested in the truth, you were busy insulting me for your own entertainment, to boost your tiny ego. I'm guessing that's your substitute for achievement.
Do go on. You were saying? Something about the news being more objective than first-hand eye-witnesses?
On FR, claiming the mainstream press is more accurate than first-hand experience is a Penalty -- 15 yards and loss of credibility.
Your 'links' are not persuasive.
Besides, anyone who has read just a few of your posts already realizes that your real purpose here is to insult people who disagree with you in a pathetic attempt to massage your sagging sense of self-worth.
Since you can't raise yourself up by your own works, you attempt to tear others down.
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