Northeast Utilities confirms IT outsourcing plan

Weeks after telling IT workers it was considering outsourcing tech work, Northeast Utilities says it will cut 200 jobs and turn over some operations to Indian companies.

After weeks of keeping its IT workers in the dark, Northeast Utilities last week acknowledged that it plans to cut half of its tech jobs and turn over part of its IT operations to a pair of India-based outsourcers.

The announcement made official what was already suspected -- the company, which operates New England's largest energy delivery system, had told its IT workers weeks ago that it was considering outsourcing tech work.

NU employs about 400 IT workers and will retain "about half" of them after turning some operations over to Infosys and Tata Consultancy Services, two of India's largest IT service providers. About 40 of the affected employees will be rehired by the outsourcers "and will still work at NU facilities," the company said.

NU said the transition will last from November till June. It is offering employees a voluntary separation package.

An NU IT employee, who asked not to be identified, told Computerworld that the earlier heads up had left many people worried about their futures.

David Lewis, CEO at OperationsInc, a human resources consulting firm, called NU's decision to alert employees to the possible outsourcing of their jobs "kind of mind-bogglingly stupid." But he and others didn't discount the idea that the internal announcement was calculated.

Uncertainty can lead people to start looking for new jobs, said Christine Santacroce, business development manager at IT staffing firm Modis in Hartford. And because employers don't have to offer severance pay to workers who leave on their own for new jobs, she noted, a company could save money by dropping hints that cause staffers to worry about their job security. And if a rush of employee departures destabilizes the IT department, the need to embrace outsourcing "becomes self-fulfilling," she added.

Lewis described such a scenario as an example of "artificial attrition," and added, "I'm not saying it makes any sense, but you can see it as a strategy."

NU's initial heads up triggered a backlash led by Connecticut Attorney General George Jepsen and Connecticut House Majority Leader Joe Aresimowicz (D-Berlin), who along with colleagues unsuccessfully urged NU not to cut jobs.

Hartford-based NU last year merged with Boston-based NStar to create an electric and natural gas utility with 3.5 million customers in three states. At the time, the newly merged companies expected $780 million in savings over 10 years.

The job outlook for IT workers in the Hartford area is mixed. The IT job market is not as good as it was five or six years ago, and the state is not seeing a lot of new development. "We're sort of in this holding pattern," Santacroce said.

NU has a reputation for having "a pretty good .Net shop," so its developers are in a good position, as are people with big data and business intelligence experience. Desktop support technicians and telecom and network admins face a tough time, she said.

Santacroce said that in any job hunt, proactive people who move quickly will be in better shape, because a layoff of several hundred IT workers will "inundate the market fairly quickly."

Tom Mazzulla, a senior IT recruiter at iTech Solutions in Farmington, Conn., said NU developers should be able to find something, though it's a difficult market overall.

"Employers are driving the market right now," said Mazzulla. "[That] allows them to be much more particular about who they are going to hire... and it allows them to pay less."

This version of this story was originally published in Computerworld's print edition. It was adapted from two articles that appeared earlier on Computerworld.com: "Utility Sets IT Department on Path to Self-destruction" and "Utility Cuts IT Workforce, Hires Indian Outsourcers."

Copyright © 2013 IDG Communications, Inc.

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