Reliant Energy takes back outsourced IT projects

Computerworld - Reliant Energy, a Houston-based utility, hired 46 IT workers by the end of last year to work on projects previously done by Accenture under a since-canceled outsourcing contract.

Reliant's decision last year to end the outsourcing contract and bring the work back in-house at first appeared to be simply a story about job creation. But it quickly became fodder in the debate over the relationship between H-1B visa workers and companies that receive U.S. stimulus spending.

Reliant outsourced some of its IT jobs to Accenture in 2005. The Houston Chronicle reported at the time that the utility would be cutting 100 of its 340 IT jobs due to the outsourcing move, though some of the affected workers were to be offered jobs with Accenture.

Last year, Reliant reversed itself and decided to take the outsourced work back in-house. Last summer, the utility began advertising for IT workers, and posted nine notices of intent with the U.S. Department of Labor to hire H-1B visa holders for some of these positions. The intent notices, part of the DOL's certification process, were leaked to the Programmers Guild.

The guild promptly criticized the company for its plan to hire foreign workers, noting that Reliant had received $20 million in October in federal stimulus money to fund electric grid modernization projects.

Reliant hired H-1B visa holders mostly to fill software engineering jobs at its Houston facilities, according to DOL documents. Salaries for those jobs ranged from $72,000 to $95,000. The company also hired an H-1B visa holder as a database administrator at a salary of $80,000. A Reliant spokeswoman, Pat Hammond, said the H-1B employees hired by Reliant had previously been employed by the outsourcer under the canceled contract.

Reliant wouldn't say why it decided to stop outsourcing the work. Accenture referred questions on the decision to Reliant.

A decision by a company to return outsourced work to an internal IT operation is unusual, said Allie Young, an outsourcing analyst at Gartner. "Once someone has outsourced, they tend to outsource more," she said.

When companies terminate outsourcing contracts, they generally hire another outsource to do the work. The primary reasons for terminating or renegotiating outsourcing contracts are pricing, performance and budget issues, according to Gartner. Young said that only a small percentage of companies that terminate outsourcers bring the work back in-house, according to Gartner survey data.

Hammond said that Reliant hired a recruiting firm to help refill the internal positions. She added that many people were interviewed, but that the company had difficulty filling some jobs that required specialized knowledge.

"Some of the most qualified applicants were working for the outsourcing firm," said Hammond, and thus were familiar with the company's systems. Some of these H-1B workers were hired to fill those slots. Hammond stressed that the company "did interview a range of candidates for those positions."