Outsource Globally to Create Jobs Locally

Last week, the city council in Burlington, Vermont passed an "anti-offshoring" ordinance that stipulates that city contracts cannot go to firms that would perform the work overseas. "It is the policy of the City of Burlington to let service contracts to contractors, subcontractors and vendors who perform work in the United States," the ordinance reads.I'm sure there are plenty of good reasons to live in Burlington--access to good skiing, fresh maple syrup (mmmm), the chance to turn your garage into a $300 per night B-and-B. But this city ordinance isn't one of them.

Governments are no different from private sector organizations, or even individuals, when it comes to finance. By definition, money that's spent on one thing can't be spent on another. And virtually all governments these days are facing tough choices when it comes to the allocation of public funds. In fact, at least one individual is alleging in court that the district of South Burlington is so broke that it fraudulently claimed emergency aid from the federal government following a 1998 ice storm.

So, if Burlington pays, say, $1 million to have a town records system built in the U.S. when it could pay half that to have it done in India, then that's $500,000 that the town does not have to spend on other projects that could create or maintain jobs within the local community. For instance, Burlington is weighing the construction of an interstate extension that would increase traffic through its downtown core, hopefully putting more people in its shops.

The project would also create construction jobs. But…it has to be paid for, and that's work that can't be offshored. In this case, it's clear that Burlington would receive the most benefit for its residents and taxpayers if it outsources IT globally, but spends locally on commerce-creating infrastructure. Food for thought, with maple syrup please.