Outsourcing on the Table

A $50 million contract in the University of California system opens the door for campuses to move IT services overseas. Will others follow in UCSF’s footsteps and cut jobs?

September 27, 2016

Information technology staff members across the University of California system are holding their breath to see if the layoffs and outsourcing at the San Francisco campus represent an individual cost-cutting measure or the beginning of a trend.

The UCSF Medical Center told staffers this July that -- because of decreasing federal health care reimbursement and cost increases associated with the Affordable Care Act -- it would cut 97 IT jobs by Feb. 28. Some of the positions will be outsourced to the Indian IT services company HCL Technologies. The university has also contracted with Dell and FireEye for data center and cybersecurity services, respectively.

“Faced with increasing service demands, as well as rising costs, various solutions were explored and discussed over an 18-month period,” UCSF Chancellor Sam Hawgood and UCSF Health CEO Mark R. Laret wrote in a July 25 email explaining the decision to staff members. “What became clear was that a new course was necessary -- one that would yield the services and capacity that the university needs within a budget that we could support.”

The layoffs affect UCSF’s IT office broadly, covering staff members responsible for application support and development, email and phone systems, and data center and network center operations and more, according to an email from university CIO Joseph R. Bengfort. Excluding contract and vacant positions, 49 career employees will lose their jobs.

In interviews with Inside Higher Ed, staff members said they are coping with the decision with a combination of frustration and resignation. Some said they are searching for IT jobs at other campuses in the system. Others said they are considering leaving the industry altogether. They asked that their names not be published as they still have five months of employment left.

“I’m trying to hang on,” a service center employee said in an interview. She said she worried about age discrimination in the job market, since she is in her 50s. “It’s going to be a tough battle.”

Other staff members bristled at the thought of training the workers who will replace them. To aid the outsourcing efforts, some staff members have had their organizational goals updated with a target of completing the transition plan by Feb. 14, with a stretch goal of Jan. 31. A staff member with about 20 years of experience at the university said he feels as though the university is rewarding employees for making themselves expendable as fast as they can.

“It’s pretty degrading,” the staff member said, adding, “I want to make sure that this cancer they’re going to introduce doesn’t spread across the UC system.”

Outsourcing IT jobs is much less common in higher education than in the private sector, said Russ Harrison, government relations director for IEEE-USA, a professional organization for technical professionals. The organization has more than 235,000 members in the U.S., but the layoff at UCSF is the first time it has been able to “conclusively prove” outsourcing in a university IT department, he said.

The layoffs even took some university officials by surprise. Larry Conrad, associate vice chancellor for IT and chief information officer at the University of California, Berkeley, wrote in a Sept. 9 letter to staff members, “Candidly, I am not aware of any major university in the country which has successfully implemented such a substantive IT outsourcing initiative” as the one at UCSF.

Based on the increase in the number of H-1B guest worker visa requests by colleges and universities, however, it is likely that other institutions have done the same, Harrison said. While the U.S. only issues 85,000 such visas a year (20,000 of which are reserved for people with advanced degrees), colleges are exempt from that cap.

Some universities have come under scrutiny for their use of H-1B visas. Wright State University, for example, last year said it was being investigated by the federal government for potentially abusing the guest worker program.

“University people are beginning to realize these H-1B [visa holders] can fill just about any job,” Harrison said in an interview.

UCSF’s $50 million contract with HCL is now raising concerns in IT offices on other campuses as well. A UCSF spokesperson confirmed that the contract, as written, could be used by any of the other campuses and medical centers in the system. None have inquired about it so far, however.

Conrad, in the Sept. 9 letter, stressed that Berkeley has “no plans to follow UCSF’s path.” He still struck a pragmatic tone on outsourcing certain IT services, which he said universities and businesses need to seriously consider.

“You all know the university is under significant financial pressure, so we have to look at all options to deliver quality IT services to our community at the lowest possible cost,” Conrad wrote. “The IT business is constantly changing. What made sense 20 years ago doesn’t make sense today. What makes sense today likely won’t make sense in another 20 years.”

The other medical centers in the UC system gave varied responses to the question of whether they are considering outsourcing IT services. A spokesperson for UC San Diego Health in an email said, “No IT staffing changes being considered here. We are not outsourcing.”

At UC Irvine Health, a spokesperson said the center is “definitely facing some of the same financial pressures as UCSF,” but added that he was “not aware of plans to outsource IT staff” (though he had “not received confirmation one way or the other yet”).

A spokesperson for UCLA Health declined to comment, while UC Davis Health did not respond to a request for comment.

Many IT workers in the UC system are members of University Professional and Technical Employees, a union affiliated with the Communications Workers of America. Keith Pavlik, a senior publications coordinator at UCSF, is managing the union’s response to the layoffs. He said the union is planning several awareness campaigns, including appealing to Janet Napolitano, the system’s president, as well as to state legislators and members of Congress.

Democratic Representative Zoe Lofgren, whose district covers parts of San Jose, has already come out against the outsourcing plan. Speaking to Computerworld, Lofgren said the university is “misusing” the H-1B visa program.

“There’s a number of reasons why this outsourcing is bad for all the stakeholders at the university, whether it’s the patients, the faculty and staff, the students or [their parents],” Pavlik said in an interview. “We will have the voice of public opinion on our side.”


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