Posted on 04/09/2004 3:34:40 PM PDT by Libloather
Edited on 05/07/2004 5:22:25 PM PDT by Jim Robinson. [history]
When low-income Arizonans report problems with their welfare payments or food stamps, they call a toll-free number provided by the state.
A helpful person in India or Mexico answers.
Under a seven-year contract totaling $30 million, calls from Arizona go either to an automated answer line, where most questions are resolved without human intervention, or to call centers abroad, where low-wage labor cuts the cost of providing live responses.
(Excerpt) Read more at azcentral.com ...
Foreign call centers outrage lawmakers
Workers in India taking welfare queries
By KAREN MacPHERSON
BLADE WASHINGTON BUREAU
Article published Monday, April 5, 2004
WASHINGTON - Heeding reports of low-wage workers in India answering telephone queries from American food stamp recipients, legislatures in 31 states are considering measures that would ban or restrict such overseas "outsourcing'' of state government contracts.
Officials at the National Conference of State Legislatures said the issue has just "snowballed'' in the last year as state officials learned that some state contractors employ workers overseas in a variety of programs as a way of cutting costs.
Ohio is an exception to the trend. It is one of a handful of states whose food stamp calls are handled by American workers, state officials said, adding that Ohio calls are answered at a center in El Paso, Texas.
Michigan, meanwhile, is among a number of states that have contracts with J.P. Morgan Electronic Financial Services, which employs workers in India and Mexico to answer some queries from food stamp recipients. A J.P. Morgan spokesman declined to comment on the issue.
The idea of overseas workers answering calls from unemployed Americans on food stamps also has sparked congressional outrage. A one-year prohibition on overseas outsourcing on many federal contracts was tucked into a massive spending bill signed into law earlier this year. Lawmakers say they will try in upcoming months to extend the prohibition.
"Our goal should be to create jobs and hire American workers,'' said Rep. Marcy Kaptur (D., Toledo). "It depends on how you measure economic growth. By hiring Americans, you create taxpayers. You pump money into your local economy. And you divert the funds that would go to J.P. Morgan.''
But supporters of overseas outsourcing argue that it is an overall net plus for the American economy and for American workers. A new report commissioned by the Information Technology Association of America, for example, contends that "worldwide sourcing'' of computer services increases the number of U.S. jobs and improves wages for U.S. workers.
"Far from being an economic tsunami that washes away domestic IT (information technology) employment as some believe, global sourcing helps companies become more productive and competitive,'' said Harris Miller, president of the information technology group.
A 50-state survey conducted last August by the Charlotte Observer found that a majority of states have contracts with companies that use overseas workers to answer questions from food stamp recipients.
At that time, 33 states, including Michigan, had contracts with Citicorp Electronic Financial Services, Inc., which since has been acquired by J.P. Morgan. Of those states, 30 had contracts using foreign workers, while two states - Nevada and New Mexico - operated their own call centers and used the foreign desks only for off-hours calls, the newspaper said.
Nine other states, including Ohio, used domestic call centers.
Nearly 10 million Americans receive food stamps and use an electronic benefits, or EBT, card, which operates like a debit card. The Observer survey found that most of the more than 20 million calls each month made by food stamp recipients about their benefits are handled by automated message centers.
Employees in call centers, meanwhile, take calls about stolen EBT cards. Call center employees handle about 700,000 calls each month.
Clearly, overseas outsourcing of calls from U.S. food stamp recipients is an issue that resonates with the public, said Justin Marks, a policy analyst with the National Conference of State Legislatures. "Just three years ago, no states were dealing with this issue. Now 31 states are concerned about it,'' he said.
"State legislatures have this dilemma - do they spend more money to keep these jobs at home while they're in the largest fiscal crisis since World War II, or do they let it go and try to save money? No one has yet done a comparison of the costs to the state vs. the costs of sending the jobs overseas,'' Mr. Marks added.
In Ohio, state agencies are trying to deal with the outsourcing issue as they sign contracts for goods and services with private companies. The state's food stamp program isn't affected, however, since Ohio is one of only a handful of states that use a domestic call center.
Under a $22 million annual contract that runs until June 30, 2005, Ohio food stamp recipients' questions or concerns are answered by workers at a call center in El Paso, Texas, said Jon Allen, a spokesman for the Ohio Department of Jobs and Family Services.
The agency now is trying to include specific language in contracts giving preference to companies promising to keep any call center or mail order work within U.S. borders, Mr. Allen said. The first contract containing such language will be for the new prescription drug program, but the language will be included in other contracts as they come up, Mr. Allen said.
Other Ohio agencies also are addressing the issue of overseas outsourcing. For example, contractors bidding on information technology contracts with many state agencies now are required to disclose if they plan to send any of the work overseas, said Gretchen Hull, a spokeswoman for the Ohio Department of Administrative Services.
But Bruce Johnson, Ohio's economic development director, said protecting the state's interests while keeping up with economic globalization "is a balancing act.
"The state thrives on international trade. We are not interested in shutting down foreign trade,'' Mr. Johnson said.
Meanwhile, other states are trying to find a way to deal with the overseas outsourcing issue. Two states, Michigan and Minnesota, have issued executive directives seeking to ensure that state agencies consider in-state or in-country contracts as "best value,'' according to statistics gathered by the state legislatures' group.
And two other states, New Jersey and North Carolina, have revamped their contracts with companies providing telephone assistance to food stamp recipients. With the revamped contracts, each of the two states is paying nearly $1 million in additional funds to hire U.S. workers to answer the calls that had been answered by workers in India.
In Kansas, however, state lawmakers last week jettisoned an effort to require the food stamp call center work to be done in the United States after they learned that it would cost about 38 percent more than the state now pays.
Some other states are considering legislation to force state contractors to disclose when they are using foreign workers, while still others would prohibit contractors' dealing with confidential information, such as medical records, from sending the work overseas.
"This has really taken off during this legislative session,'' said Kerry Korpi, director of research and collective bargaining for the American Federation of State, County and Municipal Employees.
"Once they let a contract, states generally don't have a clue as to what's going on with it. That's why states and governors are surprised to find that this work is being done overseas.''
Contact Karen MacPherson at: kmacpherson@nationalpress.com or 202-662-7075.
Erm... umm... does anyone else see something wrong with non-English speakers getting welfare benefits??
When low-income Arizonans report problems with their welfare payments or food stamps, they call a toll-free number provided by the state.
A helpful person in India or Mexico answers.
Under a seven-year contract totaling $30 million, calls from Arizona go either to an automated answer line, where most questions are resolved without human intervention, or to call centers abroad, where low-wage labor cuts the cost of providing live responses."
Caller in Arizona: This is Rico Ramirez - I HAVEN'T GOT MY WELFARE CHECK!
Welfare Agency Employee (in Mexico City): Senior - Si Hable Expanol? We show your check is now coming to Mexico.
and
About 500,000 inquiries a month pour into the system, but the live centers handle less than 4 percent, or an average of 19,000 a month, she said.
which is in conflict with:
Nearly 10 million Americans receive food stamps and use an electronic benefits, or EBT, card, which operates like a debit card. The Observer survey found that most of the more than 20 million calls each month made by food stamp recipients about their benefits are handled by automated message centers.
Employees in call centers, meanwhile, take calls about stolen EBT cards. Call center employees handle about 700,000 calls each month.
To me, the 2nd story seems like crap. Of course, the $30m price tag for only 19,000 calls per month is a little crazy as well. If correct, the $30m for 7 years equates to about $357,000 / month. Assuming the 19,000 calls/month is accurate, they are charging $18.80 per call handled by a human. Assuming 10 minutes per call, the humans are costing roughly $112.80/hour. This is cheaper?? Sounds like a massive load of profit for the execs... my guess... someone knows somebody.
Even better, with only 19,000 calls per month, or 4,384 calls/day, 6 calls handled per person per hour, and assuming a standard 12 hour dispersal of calls... this job could be handled by 61 people.
In the US, these people make about $8/hr.. cost per month for 61 people, $8/hr, 12 hrs/day, 7 days/week...$177,632/month. Even in the US the companies were making about 100% profit. With the labor cost dropped to $2/hr, monthly costs drop to $44,408.
Over $300,000/month profit for these guys?!
and that includes his wife's 37 companies.
Also in Michigan, all medicare/medicaid questions are fielded by employees of Maximus, a company which specializes in government contract work of this sort. My husband works there and this thread scares the hell out of me. Right now they are working on month-to-month extensions of the contract. Its never worried me too much because there isn't really a lot of competition for it. It has never struck me that the jobs could be sent overseas.
FWIW, Maximus has done a tremendous job with the contract. They've saved the state millions since they took over the ocntract from EDS, who in turn had saved millions when they got the contract after the state first privatized it. Basically, anyone could do a better job than the state employees.
Scary, scary stuff.
Well, that's not strictly true. The folks answering the phones account for roughly two-thirds of the employees on the contract. They don't need to be brilliant but it helps to be multi-lingual. You also need a good sized number of staff who can troubleshoot problems which invariably arise in such huge phone systems. You need to have people on hand who know the contract inside and out, you need people who know eligiblity requirements and all pertinent law backwards and forwards, you need a few human resources people, you need at least one liaison to the state, yadda yadda. These are not trained monkeys. They are very intelligent workers necessary in assuring the contract is handled properly.
It sounds like a lot but you have to keep in mind that each person answering the phone is sitting in front of a pc. Say there are sixty people just working the phones...call centers are an office just like any other. The hardware adds up pretty quick.
Today's pc's are cheaper then ever. It is not difficult to get a pc for less then $500 these days. These workers don't need the latest and greatest to read database entries off a webpage, ever a 200MHz box would work fine for that (ie: used equipment).
Allowing for NEW equipment would only increase the FIXED costs about $30,000... allowing for desks (no fancy cubes here.. $200 ea), an additional $12,000. Even the automated servers are not very expensive. Figure an additional 30 machines (callers determine which sound file they hear).. increases the fixed cost about $15,000. These costs run about $57,000 total. Allowing for unseens... increase that to $100,000. Then add office space in some warehouse district for less then $8/sq ft and go for about 2,000 sq ft, and you'd have about $1,333/month rent. These are all costs based on US numbers, not Mexican or Indian.
How about the cost of labor? With the minimum wage at what - $35 an hour - how does that compete with India?
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