Reliant Energy takes back outsourced IT projects

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."

And, she added, the other 37 IT positions brought in-house were filled by local workers.

Hammond also noted that none of the new IT positions supported the project funded with federal stimulus funds.

Despite that distinction, a person that notified the Programmers Guild of the Reliant notices of intent to hire H-1B workers, wrote in a note to Computerworld that Reliant's plan to use foreign workers is evidence "the stimulus money is not creating jobs for unemployed Americans."

The U.S. had put restrictions on H-1B in the Troubled Assets Relief Program (TARP) program legislation. The law made it difficult for financial services firms to hire H-1B workers and included rules that required companies to take some "good faith" steps to hire U.S. workers before turning to visa holders.

Lawmakers did not include a similar provision in the stimulus bill, the American Recovery and Reinvestment Act.

Nonetheless, Kim Berry, president of the Summit, N.J.-based Programmers Guild, said that a goal of the stimulus program is to preserve and create jobs for U.S. workers. He said that companies accepting stimulus money are signing "a contract with the American taxpayer."

Berry argues that Reliant didn't say it couldn't find qualified Americans to fill the internal positions. "What they are saying is the people already knew the job and that made them valuable," he said.

Berry also cited the specific job requirements sought in Reliant's advertisement for "IT SR Business Analysts." The job very specific requirements included "5+ years experience in facilitating and managing small to large projects through project life cycle leading teams of 4-10 technical and business resources." Visa critics have long said that such specific requirements are often written with a specific person in mind, such as the foreign workers working for an outsourcer. This practice was famously described in a video at a legal seminar on immigration.

Hammond disputed Berry's claim and said the company is doing "a thorough search for every one of the positions that we have."

The IEEE-USA, which is part of the Institute of Electrical and Electronics Engineers Inc., this week released its analysis of employment trends for engineers, based on government data.

Among its findings were that the total pool of employed software engineers fell from 970,000 to 952,000, or nearly 2%, during the two previous quarters. It believes that some unemployed engineers have stopped looking for work, moved other fields, or retired, the group said.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld . Follow Patrick on Twitter at @DCgov , send e-mail to or subscribe to Patrick's RSS feed .

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Copyright © 2010 IDG Communications, Inc.

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