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Can Three Senators Really End Offshore Outsourcing?

Kirsten Gillibrand

Kirsten Gillibrand

Joe Donnelly

Joe Donnelly

Sherrod Brown

Sherrod Brown

Three U.S. Senators are attempting to end the outsourcing of jobs from U.S. businesses to foreign countries. The effort raises fresh questions about the overall IT channel ecosystem, outsourcing relationships, supply chains and pricing models that stretch across the North America, EMEA (Europe, Middle East, Africa), Asia and the Pacific Rim.

U.S. Senators Sherrod Brown (D-OH), Joe Donnelly (D-IN) and Kirsten Gillibrand (D-NY) introduced the so-called End Outsourcing Act in a bid to achieve three goals:

  • Ensure that federal contracting policy takes into consideration whether companies have outsourced domestic jobs. Federal contracts, funded by taxpayers, should go to companies that employ American workers.
  • Claw back incentives and prohibit companies from receiving tax breaks for outsourcing jobs and factories. Companies that ship jobs to foreign countries should forfeit tax breaks and incentives.
  • Create tax incentives for companies that relocate foreign jobs to rural and impoverished communities in the United States. Federal policies should encourage businesses to invest in American communities.

The legislation is supported by the AFL-CIO, CWA, UAW, and USW, according to the senators.

Somewhat similar acts (such as the Bring Jobs Home Act) have previously failed to become law.

IT Outsourcing Firms, MSPs: Watch Closely

Still, the current political climate is unlike any previous season. President Trump in January said he intends to impose a border tax on U.S. companies that move some operations overseas. And in recent weeks, IT outsourcing firms worldwide have watched the situation closely. India’s top IT consulting firms, in particular, have seen their stocks pressured by U.S. policy concerns.

Ironically, small MSPs and IT consulting firms could also face new pressures from potential U.S. policy changes. Thousands of MSPs outsource their IT help desks and NOCs (network operations centers) to businesses that have support desks in India and the Philippines, for example.

Even if the MSPs aren’t directly taxed for those outsourcing relationships, they could face higher fees for the outsourced support services — and it’s a safe bet the MSPs would need to pass the costs on to U.S. customers.

We’ll update our End Outsourcing Act coverage as new developments surface in Washington.

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