TCS is shopping the unemployment-claims system to other states, most recently Indiana, says Arup Gupta, president of TCS America. He says TCS, which is close to $1 billion in annual revenue, will earn more than $15 million from state government work for its fiscal year ending March 31, out of $850 million in projected U.S. revenue. TCS's U.S. business is growing 30% annually, and Gupta sees a "huge opportunity for growth" in government, primarily at the state and local levels. It's more difficult to win federal contracts, he says, because of existing relationships and the long approval processes.

	TCS's price was so good that Keyser, then CIO of Pennsylvania's Corrections Department, couldn't pass it up.

TCS's relationship with Pennsylvania has grown from one project with the Department of Corrections three years ago to 40 IT projects with 10 state agencies. For its first job, a system that sends data electronically from county jails to state prisons, TCS bid well under the $400,000 project budget, while other firms bid at least $200,000 over budget, says Andy Keyser, former CIO of the Corrections Department who last month joined TCS as head of business development for government contracts. "I really didn't have a choice," he says. "If I wanted to get the project done, I had to take a chance with them."

Proponents argue that big companies like TCS bring jobs to the United States. The typical TCS model, in terms of development work, is to send about 70% of the work offshore, while 30%--infrastructure building and planning--is done in the United States, Gupta says. Among those working in the United States on a project, more than half are typically Indians on work visas. "We're taking in as many local U.S. citizens and permanent residents as possible," he says. "It can't be 100%, because all the investments we've made in the last 30 years are ingrained in the people in TCS in India."

Critics decry the "simplistic emphasis" on offshore outsourcing, "where buyers in the private sector and government are often urged to 'look overseas first' when procuring vendors for a technology project," according to Brewer's resolution. "I'm not saying the offshore companies aren't doing a good job," says Bruce Bernstein, president of the New York Software Industry Association. "But American companies are and can be competitive."

Bernstein's organization, which represents more than 600 New York-area vendors and developers, conceived the Buy NY campaign to try to recover some of the IT jobs lost in New York after the dot-com crash and the terrorist attacks. Bernstein maintains there are hidden costs associated with offshore outsourcing, mainly having to do with project-management problems. Many offshore services firms, including TCS, have opened U.S. offices for that reason. Indian firms' fees have been rising, says Michael Doane, an analyst with Meta Group, because of increased demand and the sophistication of their offerings. That's driving some buyers to explore other offshore operations, in places such as China.

There has also been pushback at home. New Jersey's state Senate in January approved a bill that forbids state agencies from sending services work--IT work included--offshore. An Assembly version of the bill is pending.

Jason Epstein, a lawyer with Baker, Donelson, Bearman & Caldwell who specializes in IT outsourcing, says offshore companies can help themselves by showing commitment to communities. TCS has 50 offices in the United States, including two in New York City. Its Buffalo office will serve as headquarters for its local and state government work. TCS signed a memorandum of understanding with the University at Buffalo last week to share technology research in bioinformatics that the company says will lead to recruitment and job creation in Buffalo.

Government agencies, applying the lessons of business, appreciate the offshore-outsourcing equation. The challenge will be weighing that against the needs of their constituents--and the potential political fallout.--with David M. Ewalt, Paul McDougall, and John Soat

Photo of Keyser by Alan Wycheck/Getty Images

Photo of Brewer by Sacha Lecca