WASHINGTON -- Alarmed by jobs flowing overseas where skilled workers are cheaper, state lawmakers and labor unions are fighting back.

Legislation aimed at keeping jobs in the U.S. is pending in at least five states -- New Jersey, Connecticut, Maryland, Missouri and Washington. The bills employ a variety of methods, including blocking companies from using foreign workers on state contracts and requiring foreign call-center employees to identify where they are located. On Capitol Hill, the AFL-CIO and one of its members, the Communications Workers of America, are urging members of Congress to direct the General Accounting Office to study the trend's U.S. economic impact.

By one estimate, several million U.S. jobs are expected to move offshore in the next 12 years, particularly to India. Multinational firms are feeling the first ripple of the backlash, but are bracing for the worst. "It's the perfect storm right now," says Harris Miller, president of the Information Technology Association of America, an Arlington, Va., trade group representing 500 technology concerns.

Foreign-job migration was less visible during the 1990s when the U.S. was booming and employers had trouble filling positions. That has changed as the economy continues to struggle through a three-year slump and jobs in the U.S. are increasingly scarce. Manufacturing positions were lost in droves to foreign competitors the past two decades. But the current round is hitting more affluent white-collar workers who are beginning to align themselves with new union initiatives to protect jobs.

Emotionally Charged Issue

New Jersey became the emotionally charged issue's pivotal legislative battleground in a dispute that involved all of nine jobs. Democratic State Sen. Shirley Turner said she was incensed to learn that an Arizona firm that New Jersey had hired to assist welfare recipients shifted help-center jobs from Green Bay, Wis., to India's Bombay.

Early last year, she introduced a bill requiring state contractors to use U.S.-based employees. The state Senate passed it unanimously in December, but then the business lobby, caught off guard, regrouped and mounted a fierce lobbying campaign, so now the bill is hung up in committee in the General Assembly.

Nevertheless, the bill was enough to get the attention of the offending contractor, eFunds Corp. The company agreed to move the jobs from India to a new Camden, N.J., call center that opened last month in the small basement office of a downtown bank. But the nine new jobs came at a hefty price: The state agreed to pay eFunds an additional $886,000 a year above the original $4.1 million annual contract to open the local call center -- a 22% increase that effectively cost the state nearly $100,000 per job.

"I had no idea this would be such a hot-button issue," Ms. Turner says.

Pauline Menes, a Maryland House Democrat, says she introduced a bill similar to New Jersey's after reading about the eFunds dispute. Though the Maryland legislature didn't act on the bill in the most recent session, Ms. Menes says she'll be watching what happens in New Jersey. She plans to reintroduce a more detailed bill that includes some exceptions when the legislature reconvenes in Annapolis in January. The movement to protect jobs "is something that's just beginning," Ms. Menes says.

Hiring Lobbying Firm

The bills have prompted India's National Association of Software and Service Companies, a New Delhi trade group representing 850 international companies, to hire Hill & Knowlton, an influential lobbying firm, to represent its interests in Congress and the state houses. The firm worked to water down the New Jersey bill, sending the trade organization's vice president, Sunil Mehta, to meet personally with state lawmakers, people familiar with the situation say. If the bill gets to the Assembly floor before lawmakers adjourn at the end of June, it likely will include new compromise language that will provide exceptions for foreign outsourcing of jobs. Hill & Knowlton and the Indian trade group declined to comment.

Another lobbying force opposing such measures are the 1.5 million Indian expatriates living in the U.S., mostly well-paid technical workers and professionals. They are represented in Congress by the India Caucus, the largest such group on Capitol Hill with 140 members. Its co-chairman, New York Democrat Joseph Crowley, says he objects to state legislation that would restrict businesses from making cost-saving decisions to hire foreign workers.

Opponents argue that blocking foreign employees from working on state contracts could violate World Trade Organization laws. If such legislation passed, "it would send a terrible symbolic message at a time when we are trying to open up global markets and create new markets for our exports," says Mr. Miller of the Information Technology Association, which also has been lobbying lawmakers in New Jersey.

Budding Campaign

Much of the budding national campaign is being directed by the Washington Alliance of Technology Workers, a unit of the Communications Workers of America that was created exclusively to fight overseas-job migration. After the New Jersey Assembly's State Government Committee failed to act on Ms. Turner's bill in March, the labor alliance ginned up its grassroots efforts. Within days, members of the committee were swamped with thousands of angry e-mails.

Surveys show that U.S. companies of all sizes are relocating a greater number and a greater range of service jobs to foreign nations to cut labor costs. The positions, once limited to call centers and other low-level processing work, now include stock analysis, accounting, and tax return and insurance-claims processing. More than 25% of all of the 500 largest U.S. corporations are engaged in outsourcing to foreign countries.

Developing nations can offer the technology links and a college-educated work force that is paid a fraction of U.S. salaries, so they are the prime beneficiaries of the emerging global knowledge industry. Thea Lee, assistant director of the AFL-CIO's international economics department, says U.S. policy makers don't understand the economic implications of this trend yet.

"The logical extension is that you will see massive erosion of living standards of a big chunk of the U.S. middle class," Ms. Lee says. With that in mind, the union is taking "all the steps we can in trade and tax policy to make sure we've done everything we can to make it attractive and profitable to do business here."