TVA work sent to India under fire( federal agency sending work,Jobs to China, India)

TVA work sent to India under fire Agency examining issue after Duncan complained about it

WASHINGTON - The Tennessee Valley Authority said Thursday it is exploring whether to cancel two technical services contracts, after U.S. Rep. John J. Duncan Jr. complained the utility giant was subcontracting work to employees in India.

TVA has been evaluating potential job reductions to reduce overhead costs but has no intention to lay off any of its workers because of the work being done in India, TVA Chairman Glenn McCullough Jr. said through a spokesman.

McCullough told Duncan, a Knoxville Republican, that the agency will re-evaluate whether to keep the two contracts. Duncan highlighted them at a routine TVA operations hearing held by the House water resources subcommittee.

Duncan, chairman of the panel, said he had read of TVA using workers in India in The News Sentinel.

"I don't believe that any federal agency should be sending work to China, India or any other place" overseas, Duncan said in an interview. "There's other, better ways to save money, especially in this economic atmosphere, with all the concerns about jobs."

Knoxville-based TVA spokesman Gil Francis said the contracts involve converting paper engineering drawings, mostly about the agency's coal-fired power plants, to a high-quality, very accurate computer format that allows changes in designs. An undisclosed amount of the work is going to India.

The federal corporation has paid about $2 million since 1998 to two U.S. firms chosen from nine proposals, Francis said. The two minority-owned companies are Access Systems International Inc. of New York and ValueCAD of Portland, Ore., he said.

Calvin Underwood, president of TVA's Engineering Association, disclosed early this week that TVA had awarded past U.S. contracts that got assistance from workers in India. He could not be reached Thursday.

TVA could not determine Thursday how many U.S. and Indian workers are involved in the two main service contracts and a subcontract.

The agency considered two contract proposals from Tennessee Valley firms, but their costs ranged from 24 to 76 percent higher than the selected firms, a TVA summary said.

TVA has offered financial incentives for a portion of its 13,000 workers to retire or resign. Any necessary layoffs will be announced April 22, TVA has said.

On another East Tennessee concern, Duncan told Army Corps of Engineers managers at their annual budget hearing that he found it "incredible" the White House's budget proposal suggests no funding in 2005 for construction on a new Tennessee River lock in Chattanooga. The current Chickamauga Lock is expected to fail by 2010, which could halt river commerce in much of East Tennessee.

Congress passed a law a year ago approving construction of a new $300-million Chickamauga lock. Duncan, Rep. Zach Wamp, R-Tenn., Sen. Bill Frist, R-Tenn., and later Sen. Lamar Alexander, R-Tenn., have worked for years to build support for funding.

Wamp said he is optimistic that he and other Tennessee members will be able to get Congress to pass at least $13.5 million needed for the 2005 phase of construction. But it is now "a tougher hill to climb" without initial White House support, he said.

Tax-return preparation joins exodus to India

UP TO 200,000 TO BE OUTSOURCED ABROAD

By Rachel Konrad

Associated Press

Twelve-hour shifts and seven-day work weeks exhausted accountants at Rucci, Bardaro & Barrett. But most painful for Chris Barrett was the annual layoffs of seasonal workers and interns after April 15.

So Barrett, a partner in the Massachusetts firm, will send about 150 of his 600 clients' tax returns this year to India, where recent college graduates will prepare Americans' 1040s. Barrett won't hire -- or fire -- any extra employees, and the average turnaround time for completing returns is already shrinking.

``We're always looking for ways to reduce the pressure,'' Barrett said. ``It frees us up to provide financial and estate planning, which we didn't have time for when we were too busy filling out returns.''

Tax experts say Indian chartered accountants -- the subcontinent's version of certified professional accountants -- will prepare 150,000 to 200,000 returns for 2003 taxes, up from about 20,000 for 2002 and 1,000 for 2001.

Critics say outsourcing short-shrifts U.S. accountants and exposes unwitting Americans to identity theft, which the Federal Trade Commission ranks as one of the country's fastest-growing crimes.

On Thursday, U.S. Sen. Dianne Feinstein urged major U.S. financial services and accounting firms to be cautious about outsourcing sensitive work such as tax preparation.

``I am gravely concerned that consumer data is being sent overseas without proper safeguards,'' the California Democrat wrote to chief executives of Citigroup, Bank of America, Ernst & Young, Equifax and TransUnion.

But executives argue they can't afford to ignore the trend.

The average accountant in India makes $250 to $300 a month, compared with $3,000 to $4,000 in the United States. Many firms say they'll use the savings to undercut competitors or add premium services like retirement planning. They also say Indian workers will be needed to replace droves of retiring baby boomers.

``It's going to change the paradigm in which professionals prepare taxes, maybe even more than the way TurboTax changed the way individuals did their taxes,'' said Dave Wyle, head of SurePrep of Newport Beach, a software and consulting service with 300 accountants in Mumbai and Ahmedabad.

Since the late 1990s, accountants have sent bits and pieces of tax work to India -- lists of itemized deductions or schedules of profit and loss -- primarily for multinational companies and U.S. citizens living abroad. But in the past year, they've sent thousands of individual returns to India, where about 50,000 accounting majors graduate each year.

Ernst & Young, which employs more than 1,000 workers in Bangalore, will prepare 15,000 of 100,000 tax returns abroad. About 4,000 will be for U.S. citizens living abroad, and about 1,000 for U.S. residents, spokesman Ken Kerrigan said.

KPMG, which outsources returns of U.S. expatriates, is ``considering'' expanding the practice to the returns of U.S. residents, spokesman Greg Dvorken said.

PricewaterhouseCoopers and H&R Block have no immediate outsourcing plans. But H&R's mortgage subsidiary, Option One Mortgage, is sending data-entry work to India, and H&R is studying whether outsourcing has ``other possible advantages,'' spokesman Bob Schneider said.

Critics say risks outweigh advantages.

Although firms have yet to report identity theft or fraud that stemmed from outsourcing, privacy advocates cringe at the notion of scanning and transmitting W2 forms -- along with Social Security numbers and salary information.

Democratic presidential front-runner John Kerry wants overseas call centers to disclose their locations. Some consumer groups and privacy advocates say accountants should do the same.

``If we believe in the ideas of customer choice and the market, disclosure should be the starting point,'' said Chris Jay Hoofnagle, associate director of the Electronic Privacy Information Center. ``From there we could explore whether the outsourcing nations have adequate data protection.''

Ernst & Young customers must sign a document acknowledging that a foreign accountant may work on their return. But most firms don't make such disclosures.

Accountants outsource by scanning clients' records and sending them to Indian workers through encrypted e-mail or private networks.

Indian workers complete forms obtained from IRS Web sites and transmit them to American accountants, who review, print and sign the documents, thus assuming legal liability.

To protect privacy, tax consulting firms in India -- SurePrep, Datamatics, Xpitax, Outsource Partners International and other firms -- usually have armed guards. Entry is restricted by microchip-embedded swipe cards.

At SurePrep, bags and briefcases are prohibited. Computers have no printers or devices for removable storage like floppy disks. Internet use is restricted to internal sites and tax research.

Michael Gray, a San Jose CPA whose firm prepares about 200 returns a year, worries that rampant outsourcing will limit the experience of American accountants -- and jeopardize the profession.

``If we're sending the bulk of this work overseas, then we're not going to have the jobs for Americans in the traditional training ground for CPAs,'' Gray said. ``We may see a brain drain in our industry.''

How about the Jobs for American first(This is just one State)

taxpayer dollars abroad for work done overseas: -$15 million for two software-development contracts with the State Board for Community and Technical Colleges went to Hewlett Packard; about one-quarter of the work is done in India. -$27.6 million contract with the Department of Social and Health Services delivers cash and food assistance to public-assistance recipients.

The contract with J.P. Morgan Chase uses an electronic benefits transfer system with three offshore customer centers in Mexico and India that handled about

1 percent of the 693,000 calls received in October. -$739,365 for 18 contracts with Washington State Patrol covering purchased services and employee development provided by companies in Canada and England. -$2.5 million contract between the Health Care Authority and Healthaxis in Texas was partially subcontracted to a company in India for programming work. -$18 million contract between the Department of Corrections

and IBM Global Services for programming and application development included 20 percent of the work with people and companies outside the United States.

DOC also had contracts over three years with Syscon Justice Systems in Canada for more than $262,000 for information-technology systems. -12 contracts ranging from $3,500 to $622,000 between the Department of Agriculture and companies in Japan, Taiwan, Switzerland, Malaysia, Hong Kong, Canada and Ecuador to expand export sales,

provide software-programming services and do scientific work. -11 contracts ranging from $4,800 to $347,000 between the Community Trade and Economic Development agency and overseas companies to support the state's effort to expand its exports of Washington products.

Contracts are with firms in China, Europe, Japan, Korea and Taiwan. The Olympian Online

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