IT Confidential: Should The Feds Tax Offshore Outsourcing? - InformationWeek

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08:32 AM
John Soat
John Soat

IT Confidential: Should The Feds Tax Offshore Outsourcing?

"Countries do have to protect their home markets," Cohen says

Should the federal government ban the use of offshore outsourcing for federal projects? Gerry Cohen, president of business-intelligence software vendor Information Builders, doesn't necessarily think so. But he's sure someone will suggest it, and soon. "The federal government could say, all federal [IT services] work has to be done in the United States," says Cohen, who points out that the feds have recently favored tariffs to protect the steel industry. Offshore outsourcing is turning into the kind of hot-button issue the H1-B visa was a year ago, raising the specter of security concerns, competitive prowess, and xenophobia. Cash-strapped state and local governments are looking at the offshore-outsourcing alternative to get the most out of shrinking IT dollars (see "Foreign Exchange," March 17, p. 20; The federal government hasn't committed to any major offshore projects, but it may be a question of when, not if -- President Bush's IT advisers have made it clear they would favor it for nonstrategic projects. Which is just fine with Cohen, whose company uses offshore help for specific projects. "I'm more of a free trader," says Cohen. "I'm not for any kind of government restrictions -- you get as many negative results as positive results."

Cleveland guy makes good. Last week, McGraw-Hill said it had appointed Mostafa Mehrabani as its new executive VP of information management and CIO. Mehrabani will be responsible for the publishing company's overall technology strategy and will report to McGraw-Hill VP and CFO Robert Bahash. McGraw-Hill says Mehrabani was most recently VP and CIO of TRW, the Cleveland aerospace, defense, and automotive-systems company. Actually, Mehrabani, a 22-year TRW veteran, left the his post there last April, around the time Northrup Grumman's hostile takeover began heating up, according to local reporting (Crain's Cleveland Business). He left TRW to join Cardinal Commerce, a Cleveland vendor of authentication software for financial-services companies, as chief operating officer, but then left that company shortly afterward. Northrup Grumman acquired TRW in December.

You can't make this stuff up! Former Vice President Al Gore -- a self-professed fan of the Mac OS X operating system -- joined Apple Computer's board of directors last week. Gore's experience of having helped "run the largest organization in the world -- the United States government," makes him right for the job, said Apple CEO Steve Jobs in a statement. The role isn't entirely new to Gore: He serves as a senior adviser to Internet search firm Google Gore has long been a promoter of technology, and while vice president, he lobbied for federal investment in the Internet -- or invented the Internet himself, depending on whom you ask.

Apple to the Gore! I have to admit, I shudder at the thought of getting stuck in a room with Al Gore and Steve Jobs. Maybe they can just E-mail me their industry tips (so can you), to [email protected] or phone 516-562-5326. If you want to talk about who really benefits from offshore outsourcing or who invented the Internet, meet me at's Listening Post:

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