The IT employees at Unum Group, a Chattanooga, Tenn.-based insurer, are alert to the possibility that their employer may shift work to an offshore outsourcing firm. The employees don't know much yet, but they know enough to be alarmed -- and a letter sent out last week by the CIO did little to change that.
The news about Unum, which reported nearly $11 billion in revenues last year, originated in a recent blog post by Sara Blackwell, a labor attorney in Florida who represents former Disney IT workers in a lawsuit after that firm replaced them with offshore outsourcer workers. Some of the replacements were on H-1B visas.
Blackwell claims that several hundred IT employees are at risk of being laid-off or rebadged with an IT services contractor. A Chattanooga newspaper, the Times Free Press, reported last week on the possibility and included Unum's response. The firm calls Blackwell's claims speculation and hearsay.
Even so, an IT employee at Unum said the local newspaper report was true, and said workers haven't been told much except that management is looking at the possibility of outsourcing IT jobs -- and others -- to cut costs. "I don't understand why they are looking to outsource when the company is doing well," the employee said.
After the Times Free Press story appeared, Unum CIO Kate Miller sent a letter to IT employees. She wrote that the company is looking at a "few areas within IT that have been identified as having potential for increased leverage of external partners."
Unum is still "in the evaluation process," Miller wrote, stressing that no decision would made for a couple of months.
Miller's letter, which was seen by Computerworld, described the firm's approach in using "external partners" and said it wasn't a new development. "In certain cases, external partnerships can help us deliver better capabilities faster and allow our people to focus on the areas where we can have the greatest impact," wrote Miller.
"Unum is committed to a strong IT function and organization driven primarily by our own employees," she wrote.
Computerworld sought an interview with Miller, but a company spokeswoman declined the request. Miller was appointed CIO in 2013, and had previously worked in Washington as associate CIO of applications development for the Internal Revenue Service.
A spokeswoman for Unum, Mary Clarke Guenther, said cost issues alone "aren't enough to lead us to a decision to work with an external partner. Relationships have to make sense on a number of levels, including enabling us to better serve our customers, supporting the long long-term growth and efficiency of our business, and driving outcomes that are better than those we can achieve ourselves."
David Lewis, president and CEO of OperationsInc, a Norwalk, Conn.-based human resources consulting firm, argued that Unum is now doing damage control.
"I would expect that, no matter what Unum leadership has to say, the damage has been done, and the employees as such are not trusting of any messages to the contrary," said Lewis.
Phillip Tsen, a former offshore executive at IBM who has since written a fictional book that explores the morality of offshore outsourcing, warns about the practice. He explored the impact of outsourcing in The PM Executioner: A Project Manager's Journey in Offshoring Jobs, which describes what happened to one Peter Fallon, a project manager. (The book is available in both Kindle and softcover editions; Amazon price $2.99-$16.95.)
Outsourcing an IT organization "including valuable employees, is sending a wrong message to the rest employees in the company; it will create a low morale and less loyal relationship for a long term," said Tsen.
He argued that "managers are the culprit of fostering an inefficient organization" and said shifting work to an offshore pool of workers "will not fix the organizational and the project management problems."
Tsen warned that life will not become easier for IT leaders who move to a "vendor management role" after they transfer IT services to an outsourcing firm. "Don't think the standard solution template that was presented to you with your competitors' logos as references will be the right solution for you," said Tsen. "Take the control of implementing your own solution.
"Holding your vendor accountable for meeting an agreed-upon set of KPIs [key performance indicators] does not translate to your business success," he said.
Instead, Tsen said, firms and employees should work together during a transformation, which "requires employees to demonstrate their capability of learning new technology and their willingness to contribute into the transformation efforts."
The turnover rate in offshore work is high, he said, and there's "no loyalty in offshore workers." The result: A firm's technical and business strategies will leak out "simply via your offshore workers' job hunting interviews."