BC's Big Outsourcing Bet
Contracting out government jobs while hoping to lure global outsourcing our way. Last in a series.
When the NDP government was in power in the 1990s, BC Federation of Labour president Jim Sinclair was on BC Hydro's board of directors. He recalls a Hydro executive arriving at a meeting with a plan to cut the number of call centres in half. "Then she said, with a big grin on her face, 'I guess it goes without saying that if you let me I could get this work done for half the price we pay here by getting people in Georgia to do it.' We all laughed."
Sinclair says she got her way on consolidation, but she at least understood implicitly that BC Hydro is a B.C. company, so its work stays here.
Sinclair gets nostalgic when he talks about the importance of commitment to place. "In the old days, there was a sense of community, the school was important, the bank was important, the theatre was important. You wouldn't consider sending the jobs of your neighbour somewhere else to lower the prices you pay. You wouldn't consider that."
So he's frustrated by BC Hydro's decision under the BC Liberals to eliminate the "15 percent rule", which allowed Hydro to pay that much more than the lowest bid on a tendered contract if it kept the work in B.C.
Sinclair sees the move as indicating the BC Liberals' disregard for B.C.-based employment. Pick an issue -the Terasen gas utility's sale to a U.S. company, BC Ferry construction contracts with German shipyards, public service outsourcing deals with multinationals Accenture, IBM, and Maximus - Sinclair isn't happy with provincial government policy. He believes the government is ceding control over our economy and our good jobs to international corporations.
"If you ask the public whether jobs should stay in British Columbia," Sinclair says, "and whether they should be good-paying jobs, and whether there should be rules and regulations that protect work in British Columbia, the vast majority would say yes."
The depth of the gulf between Sinclair and the government, however, becomes completely apparent only when he says that when companies decide where to operate they look first at the nature of your workforce. "It doesn't matter what your tax structure is."
Global rules, local needs
Finance Minister Carole Taylor, in a brief conversation with The Tyee about outsourcing in September, the day after she delivered a $143 million annual tax break to corporations, defended the Liberals' approach. "You can't have a provincial government that decides to play by different rules than the rest of the world and expect businesses to want to come here," she said, when asked why the government favours tax breaks over such policies as BC Hydro's 15-percent rule. "These days, businesses can move so easily and so quickly."
Like Sinclair, Taylor also talks about her commitment to the place where we live. She argues B.C. lost a lot of corporate head offices in the 1990s because provincial taxes and regulations drove them away. "When they make the decision to go, they're gone," Taylor says. "You almost have to start over again, and look for new companies, and nurture them." She pointed to the Liberals' big biotechnology tax breaks, which have retained and attracted several businesses, as part of that effort.
On the matter of outsourcing government work such as Medical Services Plan administration and computer maintenance services, Taylor acknowledges she's concerned that both government transparency and the culture of public service are issues when large projects and service functions are contracted out. But Taylor, who oversees the Sea-to-Sky Highway and Abbotsford hospital outsourcing managed by Partnerships BC, won't second-guess the BC Liberal government's decision to directly and indirectly contract out large components of public business to private corporations.
The moves save money and create a new kind of B.C. business infrastructure that will attract work from other jurisdictions, Taylor believes. "B.C. has been a net beneficiary of outsourcing," she argues.
B.C. seeks outsourcing intake
Kirsten Tisdale, who as head of the Alternative Service Delivery Secretariat helps negotiate the government's service contracts with companies such as Maximus and IBM subsidiary ISM Canada, says the government believes these companies will create "centres of excellence" that will attract work to B.C. from other jurisdictions. "We become a foundation client. Once that work is going well, they can add other business to our centres. Other governments, other Crown corporations in the broader public sector would look at working with them."
Tisdale says the contracts she negotiates specify that jobs remain in B.C. "We haven't allowed work to go outside the province. We need to know exactly who the subcontractors are."
Asked about the payroll of former government-employed computer support staff now working for ISM Canada, which is now done in Costa Rica, she says "I don't know anything about that."
She did say big companies doing provincial government work need to be able to take advantage of their global skill pools, and that some out-of-province work in areas such as software development is inevitable. As such, contracts need to be "thoughtfully constructed", but she says the companies are adhering to the spirit of the contracts. "'We're going to do the work in B.C. and it's going to stay that way unless there's an incredibly strong reason.' That's what we're seeing. We want to make these shining examples that the rest of the country would be interested in."
Offshoring often hidden
Ron and Andy Hira's book Outsourcing America, however, paints a more complicated picture of both corporate and government outsourcing south of the border. Many government contracts with private businesses have gone astray, and that's one reason why 33 states now have legislation that, in some way, restricts outsourcing.
Governments, say the Hiras, often offshore work unwittingly. "The state of Washington determined that about 150 contracts contained at least $50 million worth of offshore outsourcing," states the book. U.S. health care is increasingly being outsourced, with Indian radiologists reviewing X-rays and MRIs of U.S. patients. The University of California at San Francisco Medical Centre found out its medical transcription work was being sent offshore when an unpaid Indian subcontractor threatened to post patients' medical records on the internet.
While Sinclair acknowledges that some work might come to our "centres of excellence", he says policing the behavior of the companies doing government work is very difficult. "These people will make capital spending decisions that are not based on the best interest of British Columbia. How do you police that? It's complicated, let me tell you."
Then there's the matter of what happens when contracts with outsourcing companies expire. Sinclair sees a slippery slope, and as an example he points to the pending sale of Terasen, formerly BC Gas, to the U.S.-based pipeline giant Kinder Morgan. "The Socreds could tell 20 years ago what was going to happen, so they established two rules [for BC Gas]: you've got to have your headquarters here and you can't have more than 20 percent foreign ownership." The BC Liberals eliminated those restrictions. "Is Kinder Morgan going to keep Terasen's headquarters here? Not a chance."
He sees the same fault that he finds in the sale of BC Rail to CN Rail. The government, Sinclair declares, "gutted the intellectual capacity of the B.C. economy to run a railway in our own best interest".
Transparency is elusive
The flip side of this, for the Liberals, is that there are occasions when the intellectual capacity of government enterprise has been found wanting. There is no better example than poor computer systems management, which has plagued governments in B.C. and around the world. "We got out of that business," says Tisdale. "We're lousy at it, because it isn't our core business. There were a lot of spectacular failures. If you want to do that in India or wherever else there's a big pool of talent, I don't know that that's a terrible thing."
Tisdale does acknowledge that transparency is an issue in government outsourcing contracts, but she argues the defining the issue involves creating trust in the government's procurement process, which obliges corporations to reveal their cost structure and corporate strategy. "If we turn around and say now that you've opened your kimono and shared with us all your secrets, we're going to turn around and open that up to all your competitors, these firms are not going to come to the table and negotiate with us."
However, for critics of outsourcing, confidentiality has become a pretext for needless secrecy. It kept cut-and-cover construction plans for the Cambie rapid transit line from being publicly discussed. It prevents the public from knowing what Maximus's Medical Services Plan and Pharmacare performance targets are, or the amount of the fines it is paying for failing to reach those targets.
Is the potential for offshoring just another secret to be kept?
While summaries of certain contracts are available to the public, and the entire contracts are available to the provincial Auditor General, The Tyee was faced with a prohibitive $1,200 bill to receive an edited version of the MSP/Pharmacare contract.
BC Government Employees Union communications officer Chris Bradshaw has seen portions of it as a result of court action, and worries that its provisions to protect B.C. jobs can be easily voided by government inaction. "This is a public program that is being paid for with public funds," Bradshaw says, "and there's no public accountability."
BC Hydro's contract with Accenture Business Services has a long list of obtuse exceptions to the rules governing B.C. employment - even lawyers in a courtroom might not satisfactorily decipher them. Tisdale, who wasn't responsible for that contract, laughed when she heard a few. They effectively made her point about the importance of trust and goodwill.
Relationships require trust
Tisdale says one other thing of importance on the subject: "Deals don't fall apart because of a little clause in a contract; deals fall apart because people can't get along. They don't understand what the other needs out of the deal. You need to make sure the staff are treated well and have incentive to continue to perform and are happy doing that."
Many of Accenture's former Hydro employees would find that ironic. Andy Ross, president of the Canadian Office and Professional Employees local 378, says their contract with Accenture expired in March, and negotiations on a new deal are at a stalemate. Ross claims Accenture is seeking 25-percent concessions on wages and benefits.
Accenture's Vancouver labour relations spokesperson Brent Hale was not available to comment on Ross's assessment, but one senior Hydro insider told The Tyee Accenture is under real pressure to deliver its on service commitments within its existing budget.
Then, of course, there are the customers. Complaints to the BC Utilities Commission about BC Hydro's outsourced services, particularly from rural areas, are rising.
For Penny Gurstein, the UBC associate professor whose Emergence Canada research project has uncovered both positive and negative examples of global outsourcing, one of the defining considerations regarding government outsourcing is culture. "I don't think Maximus understands the culture of B.C. I don't think Americans understand the subtleties of Canadian culture. More importantly, I don't thing they understand the subtleties of government."
We're well down our new road, however. The B.C. government and U.S. corporate outsourcing giants are married now, for a fixed term and separation will not be easy. This complicated new relationship between government, corporations, and unions is going to require some real trust if it's going to work.
In B.C., trust has always been elusive. Global outsourcing is only going to grease the pole we're trying to climb.
Read the rest of this series:
Charles Campbell is a contributing editor to The Tyee. ![[Tyee]](http://thetyee.cachefly.net/ui/img/ico_fishie.png){kind=small}
- Shadow Workers of the World, Revolt!
- 'The Kids Are All Right'
- 'Leave Your Shoes On'
- Glaciers, BC Hydro's Melting 'Batteries'
- Frankie Rose Makes Life Tougher for Journalists
- Too Much Energy Used to Mine, Move Bitumen Says BC Firm
- Economist Calls Gateway Pipeline an Inflationary 'Threat'
- Could SOPA Pervade Canadian Copyright Law?
- Would You Buy a Used Car from These Libs?
- Who Pays Huge Power Bills for Clark's Gas Plants?
- Shadow Workers of the World, Revolt!
- Eleven Oily Questions for Every MP
- Economist Calls Gateway Pipeline an Inflationary 'Threat'
- Bill Rees' Last Lecture
- Is Canada Ignoring Signs of a Coming Economic Collapse?
- Too Much Energy Used to Mine, Move Bitumen Says BC Firm
- How First Nations Are Gearing Up for Legal Battle Against Gateway
- Harper in China
- Bruce Carson Scandal Greased by Harper's Oil Sands Agenda
- BC Child Care Advocates in Geneva to Complain to UN
- How First Nations Are Gearing Up for Legal Battle Against Gateway
- Make It the Canadian Webcasting Corporation
- Harper in China
- Shadow Workers of the World, Revolt!
- Who Pays Huge Power Bills for Clark's Gas Plants?
- Expert on Healthy Democracy Takes BC's Pulse
- Remembering Lloyd Dykk's Wit, Generosity and Superb Prose
- When the Prize Is a Chance to Toil on BC's Farms
- Three Ryan Gosling Pickup Techniques that Don't Work in Real Life
- Turning Turtle in Bangkok
21
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rockyvoids
6 years ago
Comments on "BC's Big Outsourcing Bet"
( when companies decide where to operate they look first at the nature of your workforce. "It doesn't matter what your tax structure is.")
I agreee. BC taxpayer's tax dollars must be spent in BC, into BCers pockets. No exceptions!
If I want foreign products or services, I'll decide where I'll spend my tax ravaged dollar.
Rhea
6 years ago
The Terasen sale to a US company has been the last straw for me. I'm seriously looking at going to geothermal for our heat and hot water, and not just because of the price of gas and the sustainability. I'll be damned if I'll give Kinder f**king Morgan or any US company any more money than I can possibly avoid. I wonder what the BC Liberals' justification is going to be when they do move Terasen's headquarters south?
Fiat lux
6 years ago
What I find amusing in all these hand wringings and moanings is the failing to mention that this crime wave is being taught in our tax supported universities as "good economics".
Another little fact that's never mentioned is that since bank deregulation money ceased to exist and banks can create any amount for any purpuse they wish. Obviously, they do it to pad their own wealth and powers. But that money doesn't belong to them, because nobody can own money, only the people of the country, through the government. The banks can create it and confiscate the benefits to their own special interest friends, but that money still belongs to the public. They and we only have the use of it. The money in our pockets and bank accounts is not ours by law. This means that although the banks create unlimited amounts of capital to disempower and displace people, we the public are responsible for its convertibility and the benefits and damage that money creation causes.
Therefore, the cost of labour etc. can and must be covered to the public's benefit to match local prices and conditions. As I wrote last night on this same subject, the government that permits the 1000% rise of costs can not force people to work with 20 or 100% income rises.
The wages in the the low wage countries represent low costs and prices. If our costs and prices could be cut down to 10% of the present, we also could work for those wages, as we have 40-50 years ago.
I mentioned last night that we bought our first home in Vancouver for $6,500 in 1966. We added to it in 1969 and tore it down the rest in 1974, when we built a new ultra modern, energy efficient bungalow by ourselves for a material outlay of about $15,000. We sold it in 1979, when we moved up here, for $65,000. A year later it was for sale for $138,000. It has since been torn down and replaced with one of these monster city houses and today the price would probably be $300,000 ?????????
Meanwhile wages reamined stagnant and with oursourcing hundreds of thousands and millions have lost any hope ever even making a decent living.
And this is being taught at UBC and SFU and a thousand universities around the world as "wealth creating neoclassical market economics"
which is now the biggest crime wave in human history.
So why are people complaining against governments, when the real culprits are the universities ?
Ed Deak, Big Lake.
loverofalllife
6 years ago
And do not forget...Mr Erstwhistle (?) worked for Accenture as 'Union Buster' south of 49.
loverofalllife
6 years ago
Opps..I meant Mr Erstwhistle (?) from TELUS
Ron Erwin
6 years ago
I think that anything this pussy government can do to diminish the unjust influence of Public Sector Unions on our lives and pocketbooks is a good thing. So go ahead and outsource every sigle little thing we can. I don't want to be a salve to Pubic Sector Unions anymore.
Please, I beg the pussy government to get some balls.
jamez
6 years ago
Wow, Ron. Your romper roomness knows no bounds. It's a disgrace how you can sit there and basically demand the government put our economy in the toilet with a smile on your face.
Please explain, seeing as how you love to bark so much, how to maintain an economy in which British Columbians prosper and enjoy a decent standard of living.
Ron Erwin
6 years ago
Jamez' by allowing our citizens choices and limiting the influence of Pubic Sector Unions and pussy governments.
jamez
6 years ago
Choices in what way? What do choices have to do with protecting your economy from tanking through outsourcing? Do you really think that when unemployment skyrockets our economy will somehow improve?
KWD
6 years ago
Entwhistle ...
The reasons for outsourcing go far deeper than Charles Campbell’s prolefeed articles would have us believe. Although there’s the suggestion that outsourcing is a complex of economic, sociologic and cultural issues, resulting from the corporate world’s desire to get the best bang for the buck, in reality, outsourcing is the corporate world’s desperate response to a rapidly diminishing global supply of cheap non-renewable resources, in particular, cheap energy.
Finding cheap labour and finding new environments where the corporate world can avoid the ever-increasing cost of maintaining clean water, clean air, and social services such as education and health care, that cut profits, are temporary solutions to a much greater problem: the misguided belief that it’s possible to have infinite growth in a finite world.
Corporate outsourcing, co-opting resources and economic colonization at the global level are the only ways market economy cheerleaders, like Thomas Friedman, can maintain the illusion that the earth is flat, and growth has no boundaries. With the onset of peak oil, the corporate world, and Friedman, are about to get a taste of a new paradigm: a round earth teeming with very angry folks trying to reach the land of promised prosperity but no energy to get there ...
Intellectual curiosity has, once again, been deflected away from the larger picture by focusing on the conflict among the workers. If intellectual curiosity exists at all it is confined to looking at symptoms, not causes.
Outsourcing: noun-verb from the “B†vocabulary of the Eleventh Edition of the Corporate Newspeak Dictionary. The Corporate Newspeak Dictionary is designed to diminish and destroy, not extend or enhance, the range of thought thereby preventing both in-depth intellectual discussion and understanding. (with apologies to Orwell)
Birch
6 years ago
The question that constantly remains for me is,"Who does the government govern for?" The Liberals have consistently made policy decisions that favour a minority of capital-laden people, many, if not most, of whom are foreign capitalists. (This is not meant as a slur on capitalists, although in many cases it could and perhaps should be.) They derive the benefits, and the costs are diffusely borne by the remainder of us. Nonetheless, the Liberals reassure us, these decisions are all for our own good.
I have little quarrel with outsourcing if it is for something that we simply cannot do ourselves. But 95% of government business can be handled by British Columbians. I don't know many British Columbians who feel that it's their obligation to compete on a labour market with people in Shanghai or Bombay or Atlanta. They live under dramatically different conditions, and although some of those people deserve our sympathy or our support in a variety of ways, they don't necessarily deserve employment from our government simply because they can work (and live) for ten cents an hour, with the remainder of the value of our BC government contract going into the hands of some billionaire 'wannabe.'
If Ronnie E. and his junior high economics pals want their cost of living so dramatically reduced, let them move to China. I'm sure their pensions and/or dividend cheques would go much further there.
skeptikool
6 years ago
Ron Erwin,
Abracadabra! Whoosh! Your wish is granted.
Some might say that there is no way that Mr. Pr*ck himself, B.C.'s premier, and his bunch of pr*cks, can ever be mistaken for your "pussy" government. ;-)
Name goes here
6 years ago
Rumours have been circulating that the Assessment Branch of the Ministry of Education will soon be contracted out to an American company. There are many to choose from. This includes writing and marking Foundations Skiils Assessment and Provincial Exams. The Ministry changed the rules this past June, we teachers cannot see the provincial exams during or after the students have written. There are more and more multiple choice questions all machine read quickly and efficiently. The climate is wrong to announce this now, but let's wait.
And if you doubt this government to outsource. Sodexho now operates in the health services and underpays its workers. And stories about inadequate cleaning etc in the hospitals.
4Cryinoutloud
6 years ago
Government is a public SERVANT. When our government becomes a danger to our very existence then anarchy begins to sound like the better alternative because firing the bastards has proven impossible!
Who needs a government that uses our tax dollars to subsidize companies with tax incentives and then moves our jobs to another country so they can make billions in profit? What kind of idiots are we? We keep paying and paying and paying.......to have a job? Doesn't that sound counterproductive?
BC Mary
6 years ago
No matter what B.C. problem I think about, I find that the source of our "news" is badly skewed. I'd like to find a way in which to lodge complaints against CanWest's virtual lock-down on British Columbia.
Hoping for answers in the Public Policy Forum on the media in Canada [[url]www.ppforum.ca][/url], I read every syllable. Nope. Nobody there is prepared to do battle on behalf of a free press and the public interest. But there were a few worthy tips.
One came from a Maritimes professor cataloguing the treatment given to Irving Refinery employees defeated after their 27-month strike and ordered to undergo "re-education" classes ... with all Irving media howling at their heels. Imagine that. News we didn't hear much about, in the West.
Edward Greenspon (Globe and Mail) did say say a wondrous thing about corporate newspaper owners: "If you want to run a political party, run a political party, not a newspaper." Good one, eh?
And Neil MacDonald (CBC): "Newsrooms are corporate cultures. Does anyone seriously expect the news industry to begin behaving in a fashion that would cause it to lose money?" A really good one.
Jim Travers (Toronto Star): "[Media] Concentration works well for the mainstream political parties and makes it so much easier for owners, who rely on government for broadcast licences, to exhibit their fidelity. In the last election, CanWest writers spoke about "go-easy" pressures from head office ... Stephen Harper was ferried from Toronto to Hamilton in a CanWest helicopter ... in mature places ... these things would surely be less likely ... and more immediately punished."
Jeffrey Simpson (Globe and Mail) spoke of the absolute lack of anywhere in Canadian universities where media policy as it affects the public interest, could be discussed and/or taught. He saw this as the necessary first step toward creating a fairer media.
The Public Policy Forum seemed to touch upon all the things I most deplore about CanWest in British Columbia, including the way in which CanWest portrays the news entirely as god-given truth making its face to shine only upon their annointed premier. CanWest seems to own the B.C. Liberal/Socred/Reform/C.C.R.A.P./Alliance government. Any mention of the Loyal Opposition is usually given in terms of loathing.
ppforum.ca also said "News matters. Journalism matters. No real democracy can function without healthy and independent news media to inform people about the way their society works." Amen to that.
Meantime, would CanWest tell us the latest news (or subtleties) about the outsourcing of jobs, services, and assets which rightfully belong in British Columbia? I for one don't think so.
Davey-boy
6 years ago
We should not be surprised to see private companies outsourcing jobs. Their ultimate commitment is to the maximization of profits, and labour is a cost that, if lowered, can further that goal.
However, public enterprises have a more complex mandate, and the same thinking does not apply.
Besides, if one does a full economic analysis, is any money actually saved by BC Hydro's outsourcing? What about the loss of those wage dollars being spent within our economy?
Do the managers of BC Hydro have an obligation to do what is in the broader interest of British Columbians, or should they be permitted to maintain a narrow focus, like their private sector counterparts.
dorothy
6 years ago
'...there are occasions when the intellectual capacity of government enterprise has been found wanting. There is no better example than poor computer systems management, which has plagued governments in B.C. and around the world. "We got out of that business," says Tisdale. "We're lousy at it, because it isn't our core business...'
I would recommend that we look into why 'we are lousy at it, and India has a 'big talent pool'. I have never heard such loser-mentality drivel. Take a good look at how and under what conditions young people in this province must work to develop whatever talent they may have in this field. I would suggest there is no problem with the talent, but perhaps with the channels through which it is attempted guided.
Fiat lux
6 years ago
Having lived under every ideology known, I can say with a certain authority that ideologues, like religious fundamentalists, are always nutcases to various degrees and the ones who reach government levels are the worst, who, in many cases should be locked up in institutions.
As far corporations are concerned, the bigger they are the more crooked they are. No corporation can become large, and multinational, without committing long strings of crimes, cheating and lying their way to the top. After all that's what the "competitive equilibrium of the lean and mean" is about.
Small businesses have to be honest to survive, but once they get big they become legalized criminals.
Ed Deak, Big Lake.
ursus
6 years ago
you have a good point about the ideologues being nutcases rotten ronny erwin would be a perfect example.
yorkie
6 years ago
I am opposed outsourcing and strongly object to letting personal and private information go to foreign countries for processing, if we really have to outsource isn't there any-one in the rest of Canada that could do it?
Maybe we should lobby to have this made a political issue in the next provincial election, then we may see some accountability.
corpxxx
6 years ago
I am X-govt in a crown,outsourced from Ontario corp..reactive is how I deal with the public service now...but proactive was the word of training in govt.you get what you pay for...I still earn the same....