D.C. awards Obamacare IT work to offshore outsourcer

Infosys recently announced that it has won a $49.5 million contract to develop a health benefit exchange for the District of Columbia. It is one of the larger government contracts won by an offshore outsourcing firm, but it's unclear whether any of the work will be done overseas.

Health benefit exchanges are one of the changes brought by the sweeping health care reform bill, known as Obamacare but officially as the Affordable Care Act. The contract was awarded to a U.S.-based Infosys subsidiary, Infosys Public Services, in January, but the company announced it this month. Infosys is based in India.

The intent of the health exchanges, which are due to begin operation Jan. 1, is to allow consumers to compare various health insurance plans. Insurers cannot refuse to sell consumers a policy under the new law.

Infosys is acting as the prime systems integrator on the project, which includes replacing the District's legacy Medicaid and eligibility systems.

Infosys was asked by Computerworld whether the work is being done in the U.S. or offshore, and if H-1B workers were being used on the project. Infosys is one of the largest users of temporary work visas, and completes much of its IT work in lower-wage countries.

An Infosys spokeswoman said the company will not release any specifics about the contract, but said it was in compliance with contract's rules.

Similarly, the D.C. Health Benefit Exchange Authority (HBX) has not provided any information about the contract.

An HBX spokesperson said the IT contract was approved by an agency other than the exchange authority, but was uncertain what agency had approved it. Although the exchange authority is ostensibly managing the project, it didn't respond to questions by deadline about whether any of the IT work was being completed outside the U.S.

Computerworld has filed a Freedom of Information Act request with the D.C. Office of Contracts for access to the contract and any memorandums associated with it.

Offshore outsourcing firms have won contracts with government agencies, but their success is limited.

David Rutchik, a partner at outsourcing consulting firm Pace Harmon, said offshore outsourcing companies haven't historically been big players in the government sector.

"However, as they gain more credibility and beef up their internal U.S. organizations by bringing on more American resources and creating more onshore development centers, they are gaining more traction," Rutchik said. The Infosys aware is a prime example of that, he said.

Whether outsourcing firms can use offshore labor depends on the nature of the work. Federal rules around security and privacy limit where the work can be done. But "unless there are specific statutes or regulations, they can usually decide whether to use onshore or offshore resources," Rutchik said.

This article, D.C. awards Obamacare IT work to offshore outsourcer, was originally published at Computerworld.com.

Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His e-mail address is pthibodeau@computerworld.com.

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