Xerox's outsourcing one year later: layoffs

Will outsourcing to an India-based firm help or hurt employees over the long-run?

About a year ago, Xerox told some 600 employees, many of them engineers, that their jobs were being transferred to an India-based IT services firm.

How has that worked out? Neither company is disclosing detail about what's been going on, but information is leaking out about some layoffs.

The move by Xerox goes to the heart of the outsourcing debate between President Barack Obama and the 2012 Republican nominee, Mitt Romney.

It involves outsourcing product engineering employees, a skill set often linked to the nation's innovation capacity, to an offshore firm. Will Xerox's moves result in a net gain or net loss of jobs? The answers may still be in the future, but one of the people involved has the president's ear.

Xerox's CEO, Ursula Burns, is playing a prominent advisory role in the Obama administration as the vice chair of the President's Export Council as well serving on the President's Jobs Council.

Late last month, a local newspaper, the Democrat and Chronicle, which serves Webster, NY, where Xerox has facilities, reported that HCL had laid off a small number of staffers. The Xerox-to-HCL job transfers happened at facilities around the country, but as many as 250 are in the Rochester region.

A Xerox employee who was transferred over, and who provided information only on the condition of anonymity, is part of a Xerox IT group of 150 people (a subset of the overall larger number of those transferred.) This employee told Computerworld that this group is now down to about 50 who work on the Xerox account.

About 30 have been laid off; 20 recently, and 10 some months earlier. The others who aren't working on the Xerox account have been moved to other projects or left through attrition.

HCL, in response to the recent layoffs, said by email that last month "it had eliminated some engineering services positions that were held by former Xerox employees who were transferred to HCL America about a year ago. It is a very small number compared to our overall U.S. employee base of about 8,000 and our nearly 90,000 global employees."

"It is also a small percentage of those initially transferred from Xerox to HCL. While these decisions are difficult to make, we are working closely with those affected to provide the proper assistance that will ensure a smooth transition," a spokesman said.

Xerox referred any questions about layoff specifics to HCL, but the company said that "as our business needs continue to shift, we count on our partners, like HCL for product engineering, to help us deliver more efficient and effective ways for Xerox to serve the competitive marketplace."

Similar to what the company said at the time of the transition to HCL, Xerox said in a statement that there "are rapid changes playing out in the economy and specifically within the document technology industry: shifts from paper processes to digital; from black and white to color printing; and from standalone sales of printers/copiers to managed print services."

"As result, we're moving even faster to focus our business and investment in these key areas of growth," the Xerox spokesman said. "That means Xerox and our partners need to make the necessary changes to support these changes."

Xerox's workforce at the end of the first quarter of this year was 138,300 globally, with 78,600 in the U.S., a slight decline from the prior year that likely reflects some of the HCL move.

In 2011, Xerox employed 139,700 globally, and 80,500 in the U.S., and in 2010 its overall employment was at 136,500, with 79,900 in the U.S. Xerox's headcount grew dramatically in 2010 when it acquired IT services firm Affiliated Computer Services.

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.

See more by Patrick Thibodeau on Computerworld.com.

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