StanCorp Financial Group quietly notified employees in recent weeks that it is considering outsourcing a portion of its 350-employee information technology division.
The Portland insurance company has already decided to eliminate eight backshop technology jobs and farm out those chores to an IBM subsidiary in India. Over the next two to four months, StanCorp will make the call on the rest of the jobs, said company spokesman Bob Speltz.
Speltz added that it’s highly unlikely the company will outsource all of the remaining positions.
“Our core business is not IT,” Speltz said. “It’s insurance and financial services. The company has had to make some very difficult decisions to ensure our long-term viability.”
StanCorp earned $189 million in 2010 on revenue of $2.76 billion, continuing a solid run of strong profits barely impacted by the recession.
Yet, many corporate chiefs feel that to remain competitive they have no choice but to tap highly skilled overseas workers in places like India and China. Rich Pierce, who runs a Beaverton IT staffing and software development company, said the going rate for experienced software developers and IT workers is $52-an-hour in the U.S. vs. $10-$12-an-hour in Vietnam.
Pierce, of CorSource Technology Group in Beaverton, predicted outsourcing jobs, even high-skill computer jobs, is a trend that is here to stay. “If it can be done better, cheaper and more efficiently, and the technology and trust is there, it’s going to happen,” he said.
Workers in the insurer’s information technology department manage all the behind-the-scenes digital operations that help the business to function, from writing code for its IBM mainframe to keeping the company’s network of PCs functioning properly.
In September, trucking company Con-Way eliminated 200 administrative and IT jobs at its Northwest Portland offices and outsourced them to domestic and Indian contractors.
Outsourcing has long been a hot-button issue in the debate over globalization. Defenders argue that outsourcing is, on balance, a positive trend. Corporations save money, boost profits and theoretically invest that money in other pursuits that create jobs.
Meanwhile, young overseas technology workers get good jobs, helping build a new middle class that will buy American goods.
But the benefits of moving American jobs overseas is hard to accept for the newly unemployed.
Mitch Bessie started working as a programmer at International Game Technology in Corvallis in August 2008. Bessie and his 56 co-workers spent much of the next 18 months training 150 Chinese colleagues from IGT’s new Beijing office.
In January 2010, IGT announced that it was closing the Corvallis office and moving the work to Beijing.
“It’s the old cliche, the race to the bottom,” said Bessie, who has moved to the Portland area and is still looking for a job. “I’ve lived through it directly. I’ve seen it happen to my brother, my friends. I hope it bottoms out soon.”
Early proponents of outsourcing argued that it made sense to farm out difficult, low-paying factory jobs to overseas subcontractors while U.S. companies kept hold of the higher-paying, design, marketing and executive jobs.
But over the years, the emerging countries have successfully gotten high-skill manufacturing jobs as well as service-sector jobs.
In 2007, personal computer maker Dell rocked Roseburg when without warning it shuttered a 225-employee call center, the city’s fourth-largest employer. The company said at the time that disappointing sales had forced the decision. Stamoulis claims Dell moved the jobs to El Salvador.
Boston-based consultancy Forrester estimates that 400,000 service jobs have been lost to offshoring since 2000.
The U.S. Department of Labor has certified more than 50,000 lost jobs in Oregon due to trade since the passage of the North American Free Trade Act in 1994, said Arthur Stamoulis, of the Oregon Fair Trade Campaign, a non-profit group backed by labor, environmental and human rights groups. That number includes positions that have been outsourced or jobs simply lost as local companies succumb to foreign competition.
StanCorp is the largest private employer in downtown Portland. As of Dec. 31, 2010, the company employed 3,091 full-time employees, 78 percent of them in the city.
Regardless of how many IT jobs it ultimately relocates, “Portland is still a net winner in jobs,” Speltz said. The company’s strong earnings has allowed the creation of 435 new jobs between 2005 and 2009.
The eight jobs Stancorp has already decided to outsource are software development positions on the company’s IBM mainframe computer. Speltz said it is difficult these days to find Americans interested in and familiar with mainframe technology and its relatively ancient COBOL programming language.
Nevertheless, the company’s plans have left company workers unsettled about the future.
“The news has been difficult for employees, but we think that telling them was the right thing to do,” Speltz said. “We know that people are upset and concerned. They wonder what this means for them.”
Source:http://www.oregonlive.com/business/index.ssf/2011/03/stancorp_considers_moving_it_o.html
