Outsourcing state contract causes outcry.

Byline: David Steves The Register-Guard

SALEM - Oregonians may be startled to have their questions about welfare and food stamp benefits fielded by someone at a call center in India.

Nancy English was.

The Eugene resident was straightening out business involving a deceased family member who had an Oregon Trail card - a debit card used to administer food stamp and welfare benefits.

The retired educator and social worker said she was frustrated to be talking with someone who couldn't answer her questions and alarmed to think that so many Oregonians were out of work, yet state tax dollars were going to pay people overseas.

She isn't the only one upset to discover that the Arizona-based eFunds Corp., contracted to handle the Oregon Trail card program, has shifted the call center for card-holders to India.

"The governor was really mad about it. If there's not a state regulation against doing this, there should be," said Mary Ellen Glynn, spokeswoman for Gov. Ted Kulongoski. Glynn said the governor told state administrators to look into the situation because he "didn't like the practice and he wanted it to stop."

Oregon is one of several states that have contracted eFunds Corp. to handle the processing of benefits payments. The Oregon Trail card is used by about 212,000 households to access and spend welfare and food stamp benefits.

Following a global trend, eFunds has been moving many of its call centers to India. The company last year shifted its call center operations for Oregon Trail card holders from Wisconsin to India.

Reuters reported last month that eFunds had opened its sixth facility in India to meet what the company called its growing demand for outsourced services from the financial, retail and telecom sectors.

"India is a key growth market for us, with over 75 percent of our employees based here," Kathleen Flanagan, senior vice-president of eFunds Global Outsourcing Solutions, said in a statement.

Two eFunds officials contacted Thursday refused to answer a reporter's questions. One referred questions to a public relations consultant in New York, who said he was not immediately able to comment.

Frank Miles of Eugene, a community resources coordinator with the state Department of Human Services, said that while it was understandable that the state contracted with a private company to handle the technological challenge of shifting from paper-based to electronic benefits processing, it was unacceptable for that shift to mean outsourcing U.S. jobs to India.

"If the call center had been in Oregon, that's a completely different thing. That's money that remains here in Oregon," he said.

Over the past decade, the Eugene-Springfield area has become home to a half-dozen call centers, attracted by the relatively high jobless rate, the quality of the labor force, and the availability of students and others willing to work flexible hours.

The centers handle a range of work, from making sales calls for the financial services and hospitality industries to answering technical questions about software.

Among the largest are Symantec Corp.'s 705-employee customer support center in Springfield and ECE, a Texas-based contractor with 372 employees in Eugene who provide customer service for Symantec and other high-tech clients.

Lane County isn't alone in facing stiff competition overseas, where labor costs are lower. The Associated Press reported in December that, according to Technology Marketing Corp., the United States has lost 250,000 call center jobs to India and the Philippines since 2001.

Nationally, the backlash against outsourcing has prompted 31 states to propose anti-outsourcing legislation. And the eFunds call centers have led to a spate of proposals in several state capitols in recent weeks to restrict the use of public dollars to pay for offshore operations.

New Jersey's welfare agency paid out nearly $1 million for an in-state call center, after it stopped doing business with eFunds. North Carolina is considering following suit, at a projected $1.2 million cost.

But in many instances, the issue hasn't been so easy for politicians to resolve. In Kansas, lawmakers this week scrapped a proposal requiring that the work be done in the United States after learning that it would raise by 38 percent the cost of its contract with eFunds to administer its food stamp program.

An eFunds representative told Oregon contract administrators it would raise costs by $50,000 a month to ensure that phone work is done in the United States. That would come to $1.2 million for a two-year budget cycle, and the money would have to come from existing state tax and federal matching dollars, said Jeremy Emerson, administrator of contracts for the Department of Human Services.

State Rep. Phil Barnhart, D-Eugene, learned about the call center after English contacted him. He said that while his highest priority is to create jobs for Oregonians, he isn't ready to advocate laws requiring state contractors to use in-state labor. For one thing, such action would come at the risk that other states and countries could pass similar restrictions, which would harm Oregon workers and businesses.

Another complication, Barnhart said, was that he and other lawmakers have an obligation to be stewards of taxpayer dollars.

"It's a trade-off in terms of the cost of this service versus spending tax money in India when we have people in Oregon out of work" Barnhart said.

Register-Guard reporter Sherri Buri McDonald contributed to this report.