Another View: Bush brother takes the lead on outsourcing

Jay Whitehead

Florida residents should rejoice in their governor's prescience. Gov. Jeb Bush was the first to outsource the state's personnel management, giving state workers better service and saving taxpayers $173 million.

In early November, the federal government followed his lead. The week before Thanksgiving, the Coast Guard fell in. The Army, Navy and Marines will fall in soon thereafter. Come on, all you state governors out there. Step right up. Only 49 states left to go.

Gov. Bush kick-started a government outsourcing trend that has started to spread. In May, the governor and Cynthia Henderson, secretary of the Department of Management Services, got a company to deliver, in the governor's own words, 'the highest-quality [human resource] services for the men and women who dedicate their careers to public service'while saving Florida's taxpayers millions of dollars.'

Sure, the governor raised union hackles with his outsourcing plan. Unions say that the state will lose 800 personnel department jobs by contracting out the HR department. But they're wrong. The Florida outsourcing provider, Convergys Corp. of Cincinnati, plans to hire back most of the payroll processors, benefits administrators and HR employees to serve the 120,000 state employees, sometimes at wages or bonuses exceeding their state rates.

Last month, President Bush borrowed a page from his younger brother. Nothing else in 2003, not even the decision to limit wage hikes to 3.1 percent, will affect the daily work lives of federal workers more than the Oval Office's outsourcing plan. In sheer scale, the plan is breathtaking. The president's program to outsource up to 850,000 civil jobs makes the 22-agency, 177,000-employee Homeland Security Department reorganization look positively puny. It involves moving $34 billion in annual payroll to outside contractors. That wage base represents nearly 2 percent of the $2 trillion annual federal budget. By moving the jobs to outside firms, the administration estimates annual savings of 20 percent to 30 percent. The connection to the limited civil service wage increase is clear, as positions with outsourcing firms are abundantly more attractive.

Sure, there is a difference in scale between the younger brother's Florida and the older brother's America. The Florida state work force is only 120,000; the U.S. payroll is 1.8 million. But, like many brothers, these two will mimic each other while competing. The positive impact of this competition ripples through the economy. If the other 49 governors would watch this race, there would be more states in the winner's circle, rather than on the loser's list.

Jay Whitehead is an analyst in work force issues. He founded the not-for-profit Human Resources Outsourcing Association. He can be reached at [email protected]


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