Tuesday, May 16, 2017

Research: Impact of IT outsourcing on employees

The journal Work, Employment & Society recently published an article entitled “‘An end to the job as we know it’: how an IT professional has experienced the uncertainty of IT outsourcing” that foregrounds the experiences of an employee whose work is being contracted out.

The worker’s story starts with the creation of cost-savings targets by the employer. Once communicated to shareholders, the targets set expectations that may (or may not) have been achievable. The result was intense pressure to generate cost savings.

Internal restructuring and efforts to benchmark in-house work against the market” lead to significant anxiety and the spectre that this process was a sham. Eventually, all five IT functional were scheduled for outsourcing (mostly to India). 

The actual savings attributable to the outsourcing is roughly what the CEO receives as a annual bonus. All other savings (and most of the overall savings) could have been achieved by internal staff without the risk of shifting to unstable IT platforms staffed by inexperienced and dis-tinterested contractors.

The impact of this decision on morale was significant, especially given that many of the affected employees had made an extra effort (including accepting pay freezes and unpaid leave to help the company out during previous difficulties). Voluntary redundancies followed, leaving chaos, knowledge gaps, and emotional distress in the wake.

Offshoring was eventually announced with the remaining staff being treated as disposable. The employer skillfully split the workforce into different factions (those continuing and those leaving) to sow division and prevent a coherent response by the workers.

Workers wanting to receive their severance packages were then required to transfer their business knowledge to contractors and sign a gag order. Those who remain have little power and there is a significant emotional cost to all workers involved.

Overall, this short narrative highlights the messy and damaging impact the outsourcing can have on employees and their organization. One effect (not considered in the original projections) is that those workers who remain are constraining their efforts due to the betrayal by their employer of the psychological contract they previously established.

(In retrospect, I should have put a trigger warning in this post for AU employees who are reading this!)

-- Bob Barnetson

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