Outsourcing Survivors

Computerworld - When the news broke last fall about Childrens Hospital Los Angeles' new IT strategy, the prognosis for employees wasn't good.

The hospital, which had outsourced part of its IT operations a few years earlier, decided to finish what it started and hire a new service provider to take over the entire department. Such news is often seen by many employees as the kiss of death. But as the IT staff at Childrens learned when they were hired on by the service provider, outsourcing isn't necessarily a code word for "pack your bags."

"The best thing staff can do in going through this is to have an open mind and positive attitude," advises Tricia Cascione, the hospital's executive director of IT development and contract management.

Lise Luttgens, senior vice president and chief operating officer at Childrens, said she was upfront with workers from the start. But even she didn't know what their futures held at that point. Because the hospital has such narrow margins, the management had to consider layoffs, she acknowledges.

"We really didn't do any back-room discussions that were kept from the staff," says Luttgens. "We said from the very beginning, 'We'll do what we can to protect jobs, but we can't promise that there's not going to be any layoffs.'"

But employees didn't go running for the hills. Because management was so upfront, most of them stuck around, say Luttgens and Cascione, and many even helped develop the request for proposals to solicit outsourcers. In the end, they were rewarded. By the time Computer Sciences Corp. (CSC) won the outsourcing bid in May, it was so impressed with the caliber of the employees that it hired the hospital's entire IT staff, including those on contract.

"We were kind of scared at first," says Diana Anderson, now a financial portfolio manager at CSC who handles the financial applications for Childrens. "I had never been through an outsourcing before.

"But HR was always there with us," she adds. "They put us through a lot of question-and-answer sessions. And once we did the transition, it was pretty transparent to us."

Softening the Blow

There are several steps employers can take to help alleviate workers' tension when an outsourcing deal is announced, says Kazim Isfahani, a senior analyst at Cambridge, Mass.-based Giga Information Group Inc.

First, the company should let employees know what's going on as soon as possible and communicate updates regularly. "You don't want that leaking out, because you'll start to hemorrhage staff," Isfahani says. "Anytime a company decides that they're going to outsource, from the employees' perspective, it's almost like a death knell."