WASHINGTON -- This year's election focus on outsourcing is producing legislation intended to encourage firms to repatriate jobs back to the U.S. But the latest effort, and possibly the best shot from the Democrats before November -- a bill called "Bring the Jobs Home Act" -- failed Thursday on a 56-42 vote. It needed 60 votes to move forward.
Introduced by Sens. Debbie Stabenow (D-Mich.), Dick Durbin (D-Ill.) and Richard Blumenthal (D-Conn.), it offered a tax credit to companies that return jobs to the U.S. President Barack Obama backed the measure. Its provisions included a tax credit equal to 20% of the cost associated with relocation.
These tax benefit efforts have had some support from IT firms that are boosting their onshore presence. Among them is GalaxE.Solutions, a New Jersey-based IT services firm, which has launched an "Outsource to Detroit" program. Most of the firm's workers are in India and China, but its U.S. workforce is expanding.
Despite some IT sector support, the impact of the tax benefits on the broader offshore trend is considered minimal.
"The primary reason is that the bill only deals with the cost of moving jobs overseas, or moving them back onshore," said Frank Scavo, president of Computer Economics. "It doesn't deal with the ongoing cost of the job itself."
With IT outsourcing, the cost of moving the job is minimal, said Scavo. "The real money is in the ongoing costs -- what you pay that resource on a month-to-month basis."
The tax credit may help a company that is already considering an onshore move, but regarding the legislation's overall impact, "I don't think it will move the needle in a big way," said Scavo.
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