Utility cuts IT workforce, hires Indian outsourcers

Northeast Utilities confirms plan to outsource IT work to India-based outsourcers; move will affect some 200 jobs

Northeast Utilities in Connecticut Tuesday confirmed that it plans to turn over part of its IT operations to two India-based outsourcing firms, despite a recent push by state lawmakers to keep it from doing so.

NU says it employs some 400 IT workers, and "will retain about half of those employees" after turning some operations over to outsourcers Infosys and Tata Consultancy Services, two of India's largest IT firms.

Today's announcement makes official what had already been suspected -- the company had told its IT workers weeks ago that it was considering outsourcing tech work.

The utility, which operates New England's largest energy delivery system, today said it is "working with strategic business partners to help conduct the rest of the work - the majority of which will still be conducted locally."

NU said it expects that 40 of its affected IT employees will be rehired by the outsourcers "and will still work at NU facilities."

U.S. Dept. of Labor filings indicate that Infosys has been bringing foreign H-1B workers to an NU job site for the last two years.

Connecticut IT workers, especially those in financial services, were one of the first to organize against the use of the H-1B visa.

In response to their lobbying efforts, several Connecticut legislators in 2003 introduced a series of bills to limit H-1B visa use, arguing that it was being used to transfer jobs overseas. The efforts were unsuccessful and eventually the Connecticut organization that fought visa use disbanded.

Utility jobs had been considered among the more stable in Connecticut, at least until NU merged last year with Boston-based utility NStar.

Company officials at the time told regulators and lawmakers that the merger would lead to savings. Once word leaked out last month that NU was considering offshore outsourcing in its IT department, state lawmakers responded.

"Shipping these good-paying jobs away will not just hurt Connecticut's economy, but it could also pose a serious security threat," said State Rep. Joe Aresimowicz, a Democrat and House majority leader, in a statement last week.

Connecticut's unemployment rate is at 8.1%, the 35th highest in the nation, and the state's labor pool has seen a slight decline in size this year.

In a statement today, NU said: "We spent a great deal of time over the last year studying our combined, post-merger IT department and determined we had two very distinct business models - neither of which was best practice when compared with current IT models. In order to meet customer expectations and deliver the latest IT solutions, we have designed one integrated, forward-looking, technology-savvy organization."

NU said the transition will begin in November and will last through June of 2014. The utility is offering employees a voluntary separation package.

John Miano, a programmer and attorney who founded the Programmers Guild, said that when he started following IT offshoring in mid-1990s, "most of the (news) coverage was over incidents like this (NU's move) and there was shock."

Now, most of the H-1B news coverage is about how bringing in more H-1B workers will create jobs, said Miano.

"The sad thing is these companies don't save any money doing this," said Miano. "The problem is there is no management consulting dollars for telling people the risks and why nots of offshoring."

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, or subscribe to Patrick's RSS feed . His email address is pthibodeau@computerworld.com.

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Copyright © 2013 IDG Communications, Inc.

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