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Wrong Bill, Wrong Decade
Iowa signed a $419.7 million IT outsourcing deal the same week Congress moved on the Keep Call Centers in America Act. The bill wouldn’t catch the deal.
On June 18, Iowa Governor Kim Reynolds confirmed a $419.7 million, 10-year contract handing the state’s IT operations to Cognizant Government Solutions and Amazon Web Services. 192 Iowa Department of Management employees will be laid off on August 3, 2026 — the same day the contract takes effect.
The same week, the Senate version of the Keep Call Centers in America Act was making its way through committee. Sponsored by Sen. Ruben Gallego (D-AZ) and Sen. Jim Justice (R-WV), the bill aims to penalize U.S. companies that offshore their customer service operations.
If the bill passed tomorrow, it would not apply to the Iowa contract.
What the bill targets
The KCCAA, as drafted, is narrow. It targets companies with more than 50 employees that move at least 30 percent of their customer support / call center operations offshore. Listed companies go on a public Department of Labor registry and lose eligibility for federal grants and federal contracts.
It also mandates that customer service representatives disclose whether they are AI or located outside the United States.
That’s the entire functional scope. The bill is built around a 2005 mental model of offshoring: voice-based call centers, customer service reps, the recognizable face of the offshore labor trade.
What Iowa actually signed
The Iowa contract isn’t a call center. It’s a cloud migration plus a managed-IT-services agreement. Iowa is moving thousands of state computer systems to AWS and handing daily IT operations — server administration, application support, infrastructure management — to Cognizant.
That’s a different vertical entirely. Customer support is not in scope; the 192 Iowans being laid off are IT professionals, not contact center agents.
The bill doesn’t see it. As written, KCCAA would not list Iowa’s contractor, would not penalize Iowa for the offshoring move, and would not impose any disclosure obligations on the work being shifted.
Why Cognizant doesn’t count as offshore
The definitional problem runs deeper. Cognizant Technology Solutions is headquartered in Teaneck, New Jersey. It is U.S.-listed, U.S.-incorporated, and has a substantial U.S. workforce. Its 330,000-employee global delivery network is split across India, the Philippines, and other emerging markets — but the bill’s “offshore” language is built around the location of the company, not the location of the work.
So when Iowa signs with Cognizant, the bill’s framework reads it as a contract with a U.S. firm. The fact that significant portions of the actual delivery will originate from Hyderabad and Chennai does not trigger anything in the legislation as currently drafted.
This is not a loophole the sponsors will easily close. Closing it would mean redefining “offshore” to follow the work, not the contracting entity — which would put the bill in direct conflict with how most major IT services firms (Cognizant, TCS, Infosys, Wipro) are legally structured in the U.S. market. Many of them maintain U.S. legal entities precisely so U.S. procurement frameworks read them as domestic providers.
The label “made in America” was retired from this conversation about fifteen years ago. The bill hasn’t caught up.
Where the work actually lives now
The mismatch between the bill and the labor reality goes well beyond Iowa.
Hyderabad won 40 percent of all new Global Capability Centers opened by U.S. and European firms in 2026. Microsoft Copilot is deployed across 300,000 seats at India’s top three IT firms. The Indian IT-BPM sector — which IBPAP just projected at $42 billion in revenue and 1.97 million jobs for 2026 — is no longer dominated by call centers; it is an integrated platform of IT, cloud, dev, data, and AI-augmented services.
The customer-service slice that KCCAA targets is a shrinking minority of what gets offshored today. IT operations, payroll, finance, dev, research — most of what’s actually being moved abroad is invisible to the bill.
Real labor still gets done offshore. Real contracts still get signed with U.S.-listed IT majors. Real cost savings — Iowa’s projected $529.65 million over ten years — still drive procurement decisions. The same dynamic plays out across the OA500 universe of mid-market BPOs, which sit one definitional step further from the bill’s reach.
A bill that regulates a single vertical of outsourcing while leaving the rest of the market untouched is symbolic policy. It signals concern. It does not reshape the labor model.
Congress is regulating a 2005 problem in 2026 terms. The work didn’t disappear. It walked across the hall.
Iowa just proved it can sign the deal anyway.
The question for your business
If your service provider is U.S.-listed but delivers from abroad, what does “made in America” mean for your procurement?
