Infosys recently announced that it had won a $49.5 million contract to develop a health benefit exchange for the District of Columbia. That's 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 healthcare reform bill, which is commonly known as Obamacare but whose official title is 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 can't 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 city'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 it 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 she 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 United States.

Computerworld has filed a Freedom of Information Act request with the District of Columbia's Office of Contracting and Procurement for access to the contract and any memorandums associated with it.

Offshore outsourcing firms have been awarded government contracts in the past, but generally their success in securing government deals has been limited.

David Rutchik, a partner at outsourcing consulting firm Pace Harmon, said offshore services providers haven't historically been big players in public-sector IT work.

"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 contract win is a prime example of that, he said.

Whether outsourcers can use offshore labor depends on the nature of the work. Federal security and privacy rules 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 on 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 email address is pthibodeau@computerworld.com.

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