Indian ICT outsourcer, Tata Consultancy Services (TCS), has found itself embroiled in a brewing controversy involving two US states, over an undelivered project that ran more than US $9 million over budget.

TCS has been accused by the New Mexico Labour Department of departing an unfinished project to develop and implement an automated online unemployment benefits system that was supposed to have been delivered by the end of 2001. The project included an intranet system and an interactive voice response (IVR) call center, to give users access to the new system onsite via an intranet browser and offsite via an internet browser or phone, 24-hours-a-day, seven-days-a-week.

According to TCS, which issued a media release about the the New Mexico system in July 2002, the company had 25 of its US based consultants and 80 offshore coders in India working on the project.

The system, which was budgeted to cost US$3.6 million, ended up costing US$13 million, is still not in use and the New Mexico Labour Department is considering taking legal action against TCS.

Although, the system was supposed to be delivered within six months, three years later the contract has since expired and TCS has left the project without delivering an operational system, according a spokesman for the New Mexico Labour Department.

TCS, however, claims it has met the requirements of the contract and wants more money to finish the project, said another department official.

Meanwhile, two states away due Northeast, the Nebraska Labor Department has recently signed a US$7.9 million contract with TCS to develop a similar unemployment benefits system. The selection of TCS, which was awarded the contract in July against two US companies, originally sparked an outcry from political opponents to the offshoring of US government jobs, including a Nebraska state Senator, Matt Connealy who called for the contract with TCS to be cancelled. Since the New Mexico situation has come to light, Senator Connealy has become even more vocal against TCS saying in a release that the state of Nebraska had not adequately investigated similar work being done by TCS elsewhere.

The Nebraska Department of Labour has defended its decision to engage TCS, saying that its contract requires TCS to hire 25 percent of the workers for the project locally, as was the case in the New Mexico project, but unlike New Mexico, all the work would be done in the state.

As a result of the controversy, TCS took the unusual step of calling a media conference last week to defend its position on the New Mexico project, saying that, inaccuracies presented by the New Mexico Department of Labour required a response.TCS claims that the problem with the New Mexico project is not the computer system but the lack of suitable staff within the Department of Labour which TCS can train to run and maintain the system. The Department of Labour rejects this claim saying that there are plenty of qualified staff within the department but TCS refuses to train them.

At its media conference, TCS also stressed that it would not repeat the mistakes of New Mexico on the Nebraska implementation.

In Australia, TCS has about 300 staff, of which 100 are Australian citizens or permanent residents, with the rest rotating from its Indian offices on temporary 457 visas. Australian clients include ANZ Bank, Hutchison Telecommunications, CUSCAL, National Australia Bank, Westpac Bank, Woolworths and Alcoa.

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