Legislative Memo


S.6338 (Velella)



Study of “Offshore” IT Jobs



March 15, 2004


The Business Council believes that this legislation has an unclear focus, and places the assignment of assessing the state's economic competitiveness in the wrong agency. For these reasons, we recommend against its approval.

The bill directs the Department of Labor to do a study of “outsourcing,” a term that typically refers to situations where a function had been performed in-company, but is now done under contract by non-employees. The bill also refers to “off shore” jobs, a term which would apply to the purchase of services from businesses performing the work overseas, irrespective of whether such jobs or services were ever performed by New York or U.S. businesses or employees. It is unclear which of these different economic factors is the intended target of this legislation.

Likewise, the bill directs a study of the “information technology” sector. However, there is no clear definition of what that sector includes. The old Standard Industrial Classification (SIC) system did not define a broad “information” sector. The newer North American Industrial Classification System (NAICS) system does have a broad heading of “information” industries, but it includes a wide range of services, including newspaper and book publishing, periodicals, movies, recordings and cable television, as well as internet services and telecommunications. Is the study to focus on this broad “information” sector, as defined in the NAICS, some limited subset of this broad industry sector, or something else?

We also believe that the research assignment is misplaced. In our view, the most important outcome of this study would be an assessment of the competitiveness of New York's economy, and the development of strategies for improving the competitiveness of the state's “information technology” sector. Therefore, we believe that the Empire State Development Corporation, rather that the Department of Labor, would be the more likely candidate for any such assessment.

In closing, The Business Council has done an extensive survey of the state's business community on factors influencing their ability to succeed in New York. The clear response from businesses across the state, and across business sectors, was major cost of doing business factors, including the cost of health care insurance, workers' compensation, electric power and property taxes.

We believe that a legislative focus on these across-the-board competitiveness issues will do more for New York's economic climate than would research studies focusing on narrow components thereof.