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San Francisco university lays off IT workers, jobs head to India

103 points by SQL2219 10y ago

ryandrake 10y ago
Well, all we hear about anymore is the great "shortage of tech workers", so this shouldn't be a huge problem. These folks will simply waltz into any number of area tech firms tomorrow and find jobs with all these companies "struggling to find talent", am I right?
- ythn 10y ago
  The problem is that it is actually a "shortage of (cheap) tech workers". Quality is expensive, and companies don't want to pay for expensive american tech workers when they can cut costs by paying for cheap overseas tech workers.
  - shiven 10y ago
    Hence also the magic phrase "fiduciary duty" that absolves everyone of wrongdoing (if any) in making such decisions.
  - AstralStorm 10y ago
    The problem for US tech workers is that Eastern Europe is already ahead and India and China are catching up. Writing a web app can be done by anyone in the world. Writing a driver and understanding intricacies of an operating system, fewer. Creating and implementing new algorithms? Well... Sucks to be them. US somehow killed its huge research advantage enjoyed by years of successful brain drain from all over the world.
- greggman 10y ago
  Here's my anecdata. It matches my experience trying to hire. I went to tech meetup last week. about 100 people showed up. The company whose office it was in said before the night's presentation that they had about 30 jobs they were looking to fill and if you wanted one go talk to the guy in the back of the room. During the break before the second presentation they let anyone hiring get up and announce their job offers. There were around 70 jobs available over all. At that point the organizer had the bright idea to ask "who here is actually looking for a job?" Not a single person raised their hands
  - justin66 10y ago
    Two thoughts. "Are you looking for a job?" is probably the wrong way to start the conversation with a good worker who could be lured away for the right price or with a more interesting project. And I bet not one of the jobs being advertised listed a salary.
  - cableshaft 10y ago
    Considering it was a tech meetup, was it possible that the people there were there to....meet people, not recruiters? Maybe? I know I don't generally go to meetups with the express purpose of looking for a job. Although maybe if someone dropped a juicy high wage job offer for a dream job in my lap, then that's a different story. I doubt that's what was being offered, though. Notice I said job offer, not an invite to go through whatever long and arduous process these companies probably have, only to probably get passed over because I didn't answer one algorithm question just perfectly. Now if you called it a job fair, or hiring event, or something like that, maybe you'd get a different crowd of people.
- devwastaken 10y ago
  Ye olde 'We need talent!', which really means they want competing talent to lower the cost of it.
known 10y ago
Try hiring Politicians on H1B
douche 10y ago
Good luck to those losing their jobs, and good luck to the university staff and students - you're going to need it. HCL is terrible.
- i000 10y ago
  All University IT departments I have interacted with were terrible too. Universities simply cannot pay market-level salaries for IT staff because it would turn the whole pay-pyramid upside-down. The ones who stay, spend most of their time making sure their work is neither cheap nor good: You cannot use the cloud! but you can have this VMWare virtual from 2009. You need to store 500TB? we don't have it but don't you dare to use S3. To get stuff done you have to essentially run a shadow IT group. Let's see how the UCSF experiment turns out.
  - ptaipale 10y ago
    But then the same limitations are passed on to the outsourced services, and it's even less flexible because it's not just a "because I say so", it's also a contract...
  - curiouscats 10y ago
    They could pay what is justified if they wanted. University pay is usually topped by sports coaches (and not just head coaches, at many universities numerous assistant coaches make more than any executives at the school and all academic staff). There is no reason IT staff couldn't be paid at market rates. Poor management of IT is due to poor management not because "Universities simply cannot pay market-level salaries for IT staff."
    - alphonsegaston 10y ago
      Right. There are nonsense "administrators" who make similar salaries to junior devs, but they can't afford market rates. I'm sure whoever is in charge of this bound-to-fail offshoring makes at least that much as well.
    - anonsssis 10y ago
khana 10y ago
Sad and bullshit.
ljoshua 10y ago
I'm always curious about the math behind the cost savings in these types of off-shoring arrangements. I'm sure I'm missing something here, but if the HCL contract is for $50M, and they're claiming savings of $30M, that means that the expenditures for the original 97 employees+contractors would have worked out to approximately $825,000 per head, on average. ($80M / (49 + 48)) Now I know wages in the Bay Area are skewed, but even all in with benefits I'm sure that's much higher than the salaries of the replaced individuals. Best to those being replaced, I'm sure they'll be picked up by smarter employers. EDIT: Thanks to @jt2190 and @ar-jan for pointing out that I forgot to divide by 5, which gives a much more reasonable answer. It's a little too early here... ;)
- jt2190 10y ago
  You forgot to divide by five years. 165 000 USD per head, on average. $80M / (49 + 48) / 5 Edit: the savings likely also include things like benefits, office space, administration, etc.
- ar-jan 10y ago
  It's for a 5-year period, so about 165,000 per head per year, on average.
- deleted 10y ago
  [deleted]
- Spooky23 10y ago
  The devil is in the details for these things. Unless you have a really smart contract negotiator, the scope is usually fubar. Every correction is a change order, and every change order is $.
sheeshkebab 10y ago
Longer term, outsourced IT costs for larger projects are not lower than having staff. The cost savings could be in outsourcing infrastructure too, although the way medical systems are required to be maintained in US it's hard to imagine they'd move their stuff to AWS, or if they did whether it would be much cheaper. Curious to know of real reasons - maybe some internal politics? Or maybe they had issues with staff skills/retraining?
- kpil 10y ago
  Incentives related to increased cash flow, lack of domain knowledge of the management teams, and a good "packaging" and sales from the outsourcing companies that is hard to compete with internally as all the warts and pimples are visible...
- ethbro 10y ago
  Not sure if this applies to edu, but here's the way it normally seems to work in corporate: Aspiring manager decides to hitch his or her wagon to offshoring IT initiative. Manager hires consulting firm to handle details / take fall if it goes poorly. Switch-over normally goes well. Cost savings are demonstrated in year 1. Manager gets promotion / bonus because of fine job he or she did. Consulting firm gets paid because they delivered. Offshore IT appears to be working well. In year 2, company finds out there's an extremely frequent business interaction with IT that wasn't covered by the contract (because management lives in a land of abstracted rather than actual business processes). Offshore IT bills them an arm and a leg for it. Repeat this for every change request. Service also seems to degrade as new faces are substituted in on the offshore side (B team for A team). In year 3, company needs to migrate to a new business system. Offshore IT (under current contract) is revealed as utterly incompetent for something this complex. Offshore IT will happily sign a new contract to make it happen, if company is willing to pay more. In year 4, company is still attempting the migration. After signing the migration contract, offshore assigned more competent resources. However, it is revealed there is now no one left at the company with deep expertise in the system (the person who worked on it for 20 years was let go during the offshoring) to interface with offshore IT experts. And of course nothing was documented. In year 5, the migration is still ostensibly underway but has generally been accepted as failing. The offshore IT initiative is now regarded as a more expensive boondoggle that delivered worse service. The manager moved on somewhere around year 3.5, securing a better position based on his or her track record with successful IT offshoring. Which they are then asked to do for their new employer. The consultants are also in strong demand, based on their track record of successful IT offshoring initiatives. Any problems that occured when they were no longer involved obviously can't be attributed to them. Tl;dr - pump and dump with a department of employees and people's lives
koolba 10y ago
What's the work involved in these jobs? If it's being done remotely it can't be any physical maintenance as that'd require being on site.
- redm 10y ago
  Just because the company is based in India doesn't mean all the staff is. There is probably "remote hands" or light network engineering on site with the bulk administration being done remotely.
- mbreese 10y ago
  UCSF just finished migrating all of their business systems to a remote datacenter (Washington state). These two events are probably linked. Running a data center in the heart of SF isn't a good plan for a variety of reasons, so my guess is the logic was "if the hardware isn't here, do the people need to be?" (Not saying that's a good plan)
known 10y ago
Hidden secret is http://business.rediff.com/report/2009/sep/24/indians-among-most-corrupt-while-doing-business-abroad.htm http://business.rediff.com/report/2009/sep/24/indians-among-...
- AstralStorm 10y ago
  Open secret you mean.
sambull 10y ago
The goal is opex obviously.
averagewall 10y ago
A lot of criticism of how bad it will be with the outsourcing company, but clearly the real worry is local people losing their jobs to foreigners. Why blame the university? It's not a charity. If anyone really cares about the workers who lost their jobs, they can look up their address and mail them a check.
- sbarker 10y ago
  Seems like you may have missed the whole, "Give a man a fish..." thing growing up.
  - shiven 10y ago
    Not GP, but there is a sliver of sound logic in the call to put your money where your mouth is. Why not start a charity/non-profit that assists such victims of outsourcing? I'd think unemployment benefits were supposed to do that. And that is not too far from you, me and all other taxpayers writing a check to such folks. Is it?
    - cableshaft 10y ago
      Not the GP, but because starting a charity/non-profit that's worth a damn takes a ridiculous amount of work, and in areas I'm not terribly proficient in, and I have a plethora of other things that I would like to do with my limited time on earth. I already have about 100+ things I'd love to create, contribute to, or accomplish, if only I had the time and money to do so. I do what I can, but that list just keeps growing, not shrinking.
smdz 10y ago
> "It's a downgrading of services and a slap in the face for the customers," said Ho I'd express my sympathy - but these statements tend to be incorrect and said out of frustration. Infact, there is a higher probability for improvement in service and customer experience - provided it is maintenance work and the control point decisions are not outsourced. However, if customer-experience depends on cultural experience - the story could be different. And in this case HCL is a reputed organization (not too different from the likes of TCS, Infosys) > as a way to save $30 million over five years. Doesn't happen and/or highly unlikely to occur. What happens is: They start saving initially. After some time their costs start rising, but they are still saving. In parallel, the company (to whom they outsourced) starts cross-selling. This new expense doesn't affect the savings figure - afterall they are spending on "something new". Well this "something new" costs higher. Slowly - outsourcers start outsourcing decision making (and sometimes managers get themselves fired). And then the tables turn over. Later the outsourcer is so much dependent that its hard and costly to take jobs back in, because it requires a business-system overhaul. And the company would make sure (by resolving some pain points) that you are not firing them and keep tolerating them. Nothing specific to India here, it happens with Indian consulting cos and with US-based consulting cos. The only difference is that the latter provides slightly better quality at a 50-80% higher cost.
et2o 10y ago
UCSF is one of the wealthiest medical research institutions in the world. It's stunning they can't support an in house IT staff. Granted, in my experience University IT staffs are generally pretty awful. Usually, each individual lab will have one or two people with a lot of Linux experience who end up doing all of the actual work.
- redm 10y ago
  Contrast this with the Texas Medical Center (largest in the world [1]) in Houston where the cost of living is dirt cheap. [1]: https://en.wikipedia.org/wiki/Texas_Medical_Center https://en.wikipedia.org/wiki/Texas_Medical_Center
  - nilkn 10y ago
    I wouldn't say it's dirt cheap. The Medical Center in particular is in a very wealthy area of Houston and is across the street from Rice and a neighborhood of $1M+ homes. The dirt cheap homes are 20 miles out in the suburbs or in very high crime areas.
    - giardini 10y ago
      You're exaggerating greatly. Almost the entire Houston metropolitan area is less than 20 miles from the Medical center. Plenty of homes are near the Medical center. Nearly all of Houston is "dirt cheap" when compared with San Francisco's price bubble. As for crime, Houston is safer than SF proper and doesn't have San Francisco's vagrancy problems, which are as much a product of the city fathers as of the vagrants themselves.
      - shiftpgdn 10y ago
        I don't think that's a fair comparison at all. Having been in both places (currently live in Houston) we have a bad vagrancy problem that has only recently been addressed due to the superbowl. Furthermore keep in mind the list price on a house in Houston isn't indicative of the true cost. There is a 3-5% property tax that is paid out annually. I currently pay $14,000/yr in property tax against a $320k mortgage. That's after homesteading discount and disputing the property value appraisal to be lower than what I actually paid for it.
teddyc 10y ago
I worked in IT at a university for 7 years. I do not see this saving money over the 5 year term. It probably would have made more sense to relocate the IT staff out of the Bay area to a less costly location, but still be in the same time zone and able to be on site if needed. Looking at the map, the university looks land-locked and unable to expand. The idea of getting more office or classroom space by eliminating onsite IT was probably enticing, in addition to the expected cost savings.
- calvinbhai 10y ago
  Of late I have felt that this is the technique used by companies to get ride of older and expensive employees. A few years later they'll find that outsourcing is not worth it , and start hiring younger people again. That's a cheaper way to reduce healthcare and other costs that the employer has to pay for every employee
  - jordanb 10y ago
    I think you're right and you can spot check it by looking at some of the photos of the laid off workers in various articles about this move. They all appear to be in their 50s at least.
- deleted 10y ago
  [deleted]
m23khan 10y ago
Yesterday when it came to outsourcing of jobs, Trump only said 'China', 'China', 'China'. I don't know what magical spell has India cast over Americans that all American politicians have become totally stone blind to the fact that how damaging India has been to outsourcing of jobs from America to India and how many highly skilled/educated Americans have been left without jobs due to India's usurping of jobs. And to those bleeding hearts who highlight scarce attempts of Indian companies hiring in US - don't forget the fact that such job numbers dwarf the amount of jobs that have been outsourced to India. And for those karma-believers who think that one day India will taste its own medicine when they outsource to poorer nations than India - let me tell you something: India is one nation that will never,ever outsource its own jobs to other nations (mickey mouse examples won't count). How the heck can IT folks from US/Canada/UK and other such nations compete with India (and in some cases with Philippines) where wages are so low that if we here in the Western World were to work with such wages, we would need to have 3 jobs to make our ends meet.
- samfisher83 10y ago
  The wages in india IT are growing at a pretty high rate.
  - m23khan 10y ago
    Does DevOps engineer in India make US $120,000? Does Java programmer in India command US $100,000? Does a system admin. in India command US $90,000?
    - abhi3 10y ago
      > Does Java programmer in India command US $100,000? 2500 USD to 15,000 USD http://www.payscale.com/research/IN/Job=Java_Software_Developer_%2F_Programmer/Salary http://www.payscale.com/research/IN/Job=Java_Software_Develo...
      - galuano1 10y ago
        That data is just wrong, and not what people get paid in major IT players, which are more likely to get these projects. The empirical formula for a new hire is $3000 * years of Experience. The median starting Salary is $4500 ~ $5000, and the salary usually caps out at $25000, and people above that payscale are usually considered architects.
throw2016 10y ago
When blue collar workers getting outsourced comments here are usually full of pontification on capitalism and shareholder interest. When it comes to service workers some commentators are nearly gleeful at the prospect of job losses and cost savings by ai never mind it's decades away if at all. Individualism can only take you so far. Without meaningful community and social structures based on common good and mutual respect the lack of empathy and sometimes open disrespect of other peoples life conditions will ultimately come back to bite you.
calvinbhai 10y ago
Many more jobs have been outsourced to India through American companies like HP, IBM, DELL. Is outsourcing a problem worth mentioning only when a company incorporated in India gets such contracts? Or, is there a subtle hint of racial/country bias against Indians? I ask this because I never see such damning articles when whole departments/section of companies are closed when outsourced to American companies. And circumstances are very similar. Older employees cost company more because of America's awesome healthcare and insurance system. Techn knowledge gets commoditised and automated so quickly, these older employees are almost always phased out by outsourcing the jobs. It's just that when the company getting that contract is Indian, all hell breaks loose.
- atonse 10y ago
  Yup there's definitely a tinge of racism there. Even the word "outsourcing" has a "send it to a cheap third world country" feel to it. I remember talking to an American company who was doing all the design and web development for an Australian company. So I said "ahh so they outsourced and offshored it to you" and they got very defensive about how it wasn't outsourcing. Even though this is the textbook definition of outsourcing and offshoring.
  - jordanb 10y ago
    There's an argument that isn't racism here. In AU->US outsourcing, the motivation for outsourcing is not to drive down labor costs, because labor costs are clearly higher in the US. The only reason to outsource from AU to US is if people in the US can do it better. This is the opposite when we talk about outsourcing from an advanced country to a developing country. The rationale is always cost, and specifically cost of labor. It's always about driving the cost of labor downwards. And so workers in the outsourcing country resist---absolutely---because the ultimate aim is to undermine their wages and living standards.
    - p_ 10y ago
      > reason to outsource from AU to US is if people in the US can do it better. That's rarely the case More often it's about follow-the-sun
thewhitetulip 10y ago
Why isn't anyone talking about the lack of funding for universities and educational institutes? Isn't that too a part of the problem? Or is there no lack of funding?
jmcdiesel 10y ago
Can someone give an actual moral reason why this is bad? Can you explain to me why where you geographically located needs to matter? Or why Americans should be or feel entitled to jobs? If someone is willing to do it cheaper, than a business is dumb to pay more just to reinforce nationalism. This weird entitlement around jobs in America is strange to me. I appreciate the living hell out of my job, because I know it could be done by someone outside the US for cheaper (and my Company has a tech office in Bangalore). You can't appreciate something and expect it/be entitled to it at the same time. Regardless of the rest though, that moral question is what matters - what is immoral about hiring people outside of your country? Why is nationalism considered a virtue?
- Clanan 10y ago
  A few reasons which may or may not apply to this situation. I don't agree with all of them, but they're worth a discussion I suppose. * The "cheaper" country has fewer regulations. e.g. sweatshop labor that the local workforce can't compete with. * The organization profits from the local community, its regulations, and populace but doesn't "give back" through jobs, etc. * The notion of patriotism: as a community, we should put our interests first (and other countries will do the same). Obviously this is a waaaay bigger topic than can be addressed in a bullet point.
  - randcraw 10y ago
    Not to mention the sub-standard-vs-US working conditions HCL has in India. Outsourcing to a sweatshop is bad karma.
    - pm90 10y ago
      A lot of the wealth in the west was created in some rather dubious ways viz. colonies and slavery. I wonder whether that wealth would carry "bad karma" as well. The simple truth is that without laws explicitly forbidding businesses from engaging in such practices, the market WILL force them to engage in them. So we change the market using regulations to prevent such sort of a thing.
    - 10y ago
dekhn 10y ago
An important point, not well-covered. The employees worked for UCSF Medical Center, which is a corporation affiliated with UCSF. It's not actually a university- it's a hospital. There is a huge, weird overlap between UCSF and UCSF Health/Medical Center. Also, UCSF Health is known for having merged with Stanford Health (they claimed both of them would go out of business if they didn't merge), laying off its entire staff, then rehiring them with a limited contract, and then un-merging: https://alumni.stanford.edu/get/page/magazine/article/?article_id=40228 https://alumni.stanford.edu/get/page/magazine/article/?artic... (disclaimer: I was a PhD student at UCSF during the debacle).
- devoply 10y ago
  Sounds like incompetent management led by MBAs gone wild. Imagine all the cost savings guys.
  - formula1 10y ago
    I would argue competent and effective management by people who view profits worth more than ensuring everyone can enjoy life. These people aren't idiots, they understand game theory, supply and demand and cost cutting to the point they are paid absurd amounts to do the work they do. In my opinion, techs problem is that the builders/maintainers trust leadership not to cut off their heads. Only friends are safe.
    - devoply 10y ago
      The reason that they are paid a lot is because they can justify their pay in terms of cost-savings. If you have a large company paying tens of millions in salary and you cut out a few jobs you can save the company a million dollars. For that you can justify a 1% pay, say 150k or 250k. Funny thing is the tools are dumb in that they can't actually predict the long-term and mid-term effects of bringing on such a change. And this is a text-book case of that because they have reverted back to independent entities. Like for instance knowledge lost. How do you account for that? Loss of morale? How do you account for that. Communication problems, etc. etc. etc. All these things can be a competitive advantages or disadvantages for a corporation. They can potentially make or break a company. In fact someone should create an AI called MBA AI to do this sort of shit and make a killing doing it. Just replace idiot MBAs with their dumb tools with an AI. It should be simple enough to automate to generate cost saving estimates and so on. Without actually being able to predict the actual outcome in any meaningful way. I will finally add that in the end Jurassic Park was caused by an underpaid IT contractor.
KKKKkkkk1 10y ago
I think it's deceptive to frame this as Indians stealing American jobs. It's more like American engineers are being overpaid at the expense of UCSF patients and CA taxpayers.
- ythn 10y ago
  American engineers are being overpaid, or Indian engineers are being underpaid?
  - KKKKkkkk1 10y ago
    I think this question should be discussed alongside the question of why US healthcare is so expensive and inefficient compared to the rest of the world.
    - dominotw 10y ago
      because we don't do the same thing that we do in IT like importing doctors, meds ect.
a3n 10y ago
Hopefully that school doesn't have a CS or IT program, 'cause that's a pretty strong wave-off for people considering what career to go for.
aphextron 10y ago
Quote from UCSF "... I.T. costs have nearly tripled between 2011 and 2015" This is the real story. The ballooning salaries and cost of living in San Francisco from the tech boom has completely blown UC's budget out of proportion. These people are not downtrodden factory workers in some midwestern town losing their livelihoods. They are highly qualified IT workers in the hottest job market that has ever existed anywhere. They will all have job offers in weeks.

103 points by SQL2219 10y ago

Well, all we hear about anymore is the great "shortage of tech workers", so this shouldn't be a huge problem. These folks will simply waltz into any number of area tech firms tomorrow and find jobs with all these companies "struggling to find talent", am I right?

ythn 10y ago
The problem is that it is actually a "shortage of (cheap) tech workers". Quality is expensive, and companies don't want to pay for expensive american tech workers when they can cut costs by paying for cheap overseas tech workers.
- shiven 10y ago
  Hence also the magic phrase "fiduciary duty" that absolves everyone of wrongdoing (if any) in making such decisions.
- AstralStorm 10y ago
  The problem for US tech workers is that Eastern Europe is already ahead and India and China are catching up. Writing a web app can be done by anyone in the world. Writing a driver and understanding intricacies of an operating system, fewer. Creating and implementing new algorithms? Well... Sucks to be them. US somehow killed its huge research advantage enjoyed by years of successful brain drain from all over the world.
greggman 10y ago
Here's my anecdata. It matches my experience trying to hire. I went to tech meetup last week. about 100 people showed up. The company whose office it was in said before the night's presentation that they had about 30 jobs they were looking to fill and if you wanted one go talk to the guy in the back of the room. During the break before the second presentation they let anyone hiring get up and announce their job offers. There were around 70 jobs available over all. At that point the organizer had the bright idea to ask "who here is actually looking for a job?" Not a single person raised their hands
- justin66 10y ago
  Two thoughts. "Are you looking for a job?" is probably the wrong way to start the conversation with a good worker who could be lured away for the right price or with a more interesting project. And I bet not one of the jobs being advertised listed a salary.
- cableshaft 10y ago
  Considering it was a tech meetup, was it possible that the people there were there to....meet people, not recruiters? Maybe? I know I don't generally go to meetups with the express purpose of looking for a job. Although maybe if someone dropped a juicy high wage job offer for a dream job in my lap, then that's a different story. I doubt that's what was being offered, though. Notice I said job offer, not an invite to go through whatever long and arduous process these companies probably have, only to probably get passed over because I didn't answer one algorithm question just perfectly. Now if you called it a job fair, or hiring event, or something like that, maybe you'd get a different crowd of people.
devwastaken 10y ago
Ye olde 'We need talent!', which really means they want competing talent to lower the cost of it.

known 10y ago

Try hiring Politicians on H1B

douche 10y ago

Good luck to those losing their jobs, and good luck to the university staff and students - you're going to need it. HCL is terrible.

i000 10y ago
All University IT departments I have interacted with were terrible too. Universities simply cannot pay market-level salaries for IT staff because it would turn the whole pay-pyramid upside-down. The ones who stay, spend most of their time making sure their work is neither cheap nor good: You cannot use the cloud! but you can have this VMWare virtual from 2009. You need to store 500TB? we don't have it but don't you dare to use S3. To get stuff done you have to essentially run a shadow IT group. Let's see how the UCSF experiment turns out.
- ptaipale 10y ago
  But then the same limitations are passed on to the outsourced services, and it's even less flexible because it's not just a "because I say so", it's also a contract...
- curiouscats 10y ago
  They could pay what is justified if they wanted. University pay is usually topped by sports coaches (and not just head coaches, at many universities numerous assistant coaches make more than any executives at the school and all academic staff). There is no reason IT staff couldn't be paid at market rates. Poor management of IT is due to poor management not because "Universities simply cannot pay market-level salaries for IT staff."
  - alphonsegaston 10y ago
    Right. There are nonsense "administrators" who make similar salaries to junior devs, but they can't afford market rates. I'm sure whoever is in charge of this bound-to-fail offshoring makes at least that much as well.
  - anonsssis 10y ago

khana 10y ago

Sad and bullshit.

ljoshua 10y ago

I'm always curious about the math behind the cost savings in these types of off-shoring arrangements. I'm sure I'm missing something here, but if the HCL contract is for $50M, and they're claiming savings of $30M, that means that the expenditures for the original 97 employees+contractors would have worked out to approximately $825,000 per head, on average. ($80M / (49 + 48)) Now I know wages in the Bay Area are skewed, but even all in with benefits I'm sure that's much higher than the salaries of the replaced individuals. Best to those being replaced, I'm sure they'll be picked up by smarter employers. EDIT: Thanks to @jt2190 and @ar-jan for pointing out that I forgot to divide by 5, which gives a much more reasonable answer. It's a little too early here... ;)

jt2190 10y ago
You forgot to divide by five years. 165 000 USD per head, on average. $80M / (49 + 48) / 5 Edit: the savings likely also include things like benefits, office space, administration, etc.
ar-jan 10y ago
It's for a 5-year period, so about 165,000 per head per year, on average.
deleted 10y ago
[deleted]
Spooky23 10y ago
The devil is in the details for these things. Unless you have a really smart contract negotiator, the scope is usually fubar. Every correction is a change order, and every change order is $.

sheeshkebab 10y ago

Longer term, outsourced IT costs for larger projects are not lower than having staff. The cost savings could be in outsourcing infrastructure too, although the way medical systems are required to be maintained in US it's hard to imagine they'd move their stuff to AWS, or if they did whether it would be much cheaper. Curious to know of real reasons - maybe some internal politics? Or maybe they had issues with staff skills/retraining?

kpil 10y ago
Incentives related to increased cash flow, lack of domain knowledge of the management teams, and a good "packaging" and sales from the outsourcing companies that is hard to compete with internally as all the warts and pimples are visible...
ethbro 10y ago
Not sure if this applies to edu, but here's the way it normally seems to work in corporate: Aspiring manager decides to hitch his or her wagon to offshoring IT initiative. Manager hires consulting firm to handle details / take fall if it goes poorly. Switch-over normally goes well. Cost savings are demonstrated in year 1. Manager gets promotion / bonus because of fine job he or she did. Consulting firm gets paid because they delivered. Offshore IT appears to be working well. In year 2, company finds out there's an extremely frequent business interaction with IT that wasn't covered by the contract (because management lives in a land of abstracted rather than actual business processes). Offshore IT bills them an arm and a leg for it. Repeat this for every change request. Service also seems to degrade as new faces are substituted in on the offshore side (B team for A team). In year 3, company needs to migrate to a new business system. Offshore IT (under current contract) is revealed as utterly incompetent for something this complex. Offshore IT will happily sign a new contract to make it happen, if company is willing to pay more. In year 4, company is still attempting the migration. After signing the migration contract, offshore assigned more competent resources. However, it is revealed there is now no one left at the company with deep expertise in the system (the person who worked on it for 20 years was let go during the offshoring) to interface with offshore IT experts. And of course nothing was documented. In year 5, the migration is still ostensibly underway but has generally been accepted as failing. The offshore IT initiative is now regarded as a more expensive boondoggle that delivered worse service. The manager moved on somewhere around year 3.5, securing a better position based on his or her track record with successful IT offshoring. Which they are then asked to do for their new employer. The consultants are also in strong demand, based on their track record of successful IT offshoring initiatives. Any problems that occured when they were no longer involved obviously can't be attributed to them. Tl;dr - pump and dump with a department of employees and people's lives

koolba 10y ago

What's the work involved in these jobs? If it's being done remotely it can't be any physical maintenance as that'd require being on site.

redm 10y ago
Just because the company is based in India doesn't mean all the staff is. There is probably "remote hands" or light network engineering on site with the bulk administration being done remotely.
mbreese 10y ago
UCSF just finished migrating all of their business systems to a remote datacenter (Washington state). These two events are probably linked. Running a data center in the heart of SF isn't a good plan for a variety of reasons, so my guess is the logic was "if the hardware isn't here, do the people need to be?" (Not saying that's a good plan)

known 10y ago

Hidden secret is http://business.rediff.com/report/2009/sep/24/indians-among-most-corrupt-while-doing-business-abroad.htm http://business.rediff.com/report/2009/sep/24/indians-among-...

AstralStorm 10y ago
Open secret you mean.

sambull 10y ago

The goal is opex obviously.

averagewall 10y ago

A lot of criticism of how bad it will be with the outsourcing company, but clearly the real worry is local people losing their jobs to foreigners. Why blame the university? It's not a charity. If anyone really cares about the workers who lost their jobs, they can look up their address and mail them a check.

sbarker 10y ago
Seems like you may have missed the whole, "Give a man a fish..." thing growing up.
- shiven 10y ago
  Not GP, but there is a sliver of sound logic in the call to put your money where your mouth is. Why not start a charity/non-profit that assists such victims of outsourcing? I'd think unemployment benefits were supposed to do that. And that is not too far from you, me and all other taxpayers writing a check to such folks. Is it?
  - cableshaft 10y ago
    Not the GP, but because starting a charity/non-profit that's worth a damn takes a ridiculous amount of work, and in areas I'm not terribly proficient in, and I have a plethora of other things that I would like to do with my limited time on earth. I already have about 100+ things I'd love to create, contribute to, or accomplish, if only I had the time and money to do so. I do what I can, but that list just keeps growing, not shrinking.

smdz 10y ago

> "It's a downgrading of services and a slap in the face for the customers," said Ho I'd express my sympathy - but these statements tend to be incorrect and said out of frustration. Infact, there is a higher probability for improvement in service and customer experience - provided it is maintenance work and the control point decisions are not outsourced. However, if customer-experience depends on cultural experience - the story could be different. And in this case HCL is a reputed organization (not too different from the likes of TCS, Infosys) > as a way to save $30 million over five years. Doesn't happen and/or highly unlikely to occur. What happens is: They start saving initially. After some time their costs start rising, but they are still saving. In parallel, the company (to whom they outsourced) starts cross-selling. This new expense doesn't affect the savings figure - afterall they are spending on "something new". Well this "something new" costs higher. Slowly - outsourcers start outsourcing decision making (and sometimes managers get themselves fired). And then the tables turn over. Later the outsourcer is so much dependent that its hard and costly to take jobs back in, because it requires a business-system overhaul. And the company would make sure (by resolving some pain points) that you are not firing them and keep tolerating them. Nothing specific to India here, it happens with Indian consulting cos and with US-based consulting cos. The only difference is that the latter provides slightly better quality at a 50-80% higher cost.

et2o 10y ago

UCSF is one of the wealthiest medical research institutions in the world. It's stunning they can't support an in house IT staff. Granted, in my experience University IT staffs are generally pretty awful. Usually, each individual lab will have one or two people with a lot of Linux experience who end up doing all of the actual work.

redm 10y ago
Contrast this with the Texas Medical Center (largest in the world [1]) in Houston where the cost of living is dirt cheap. [1]: https://en.wikipedia.org/wiki/Texas_Medical_Center https://en.wikipedia.org/wiki/Texas_Medical_Center
- nilkn 10y ago
  I wouldn't say it's dirt cheap. The Medical Center in particular is in a very wealthy area of Houston and is across the street from Rice and a neighborhood of $1M+ homes. The dirt cheap homes are 20 miles out in the suburbs or in very high crime areas.
  - giardini 10y ago
    You're exaggerating greatly. Almost the entire Houston metropolitan area is less than 20 miles from the Medical center. Plenty of homes are near the Medical center. Nearly all of Houston is "dirt cheap" when compared with San Francisco's price bubble. As for crime, Houston is safer than SF proper and doesn't have San Francisco's vagrancy problems, which are as much a product of the city fathers as of the vagrants themselves.
    - shiftpgdn 10y ago
      I don't think that's a fair comparison at all. Having been in both places (currently live in Houston) we have a bad vagrancy problem that has only recently been addressed due to the superbowl. Furthermore keep in mind the list price on a house in Houston isn't indicative of the true cost. There is a 3-5% property tax that is paid out annually. I currently pay $14,000/yr in property tax against a $320k mortgage. That's after homesteading discount and disputing the property value appraisal to be lower than what I actually paid for it.

teddyc 10y ago

I worked in IT at a university for 7 years. I do not see this saving money over the 5 year term. It probably would have made more sense to relocate the IT staff out of the Bay area to a less costly location, but still be in the same time zone and able to be on site if needed. Looking at the map, the university looks land-locked and unable to expand. The idea of getting more office or classroom space by eliminating onsite IT was probably enticing, in addition to the expected cost savings.

calvinbhai 10y ago
Of late I have felt that this is the technique used by companies to get ride of older and expensive employees. A few years later they'll find that outsourcing is not worth it , and start hiring younger people again. That's a cheaper way to reduce healthcare and other costs that the employer has to pay for every employee
- jordanb 10y ago
  I think you're right and you can spot check it by looking at some of the photos of the laid off workers in various articles about this move. They all appear to be in their 50s at least.
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m23khan 10y ago

Yesterday when it came to outsourcing of jobs, Trump only said 'China', 'China', 'China'. I don't know what magical spell has India cast over Americans that all American politicians have become totally stone blind to the fact that how damaging India has been to outsourcing of jobs from America to India and how many highly skilled/educated Americans have been left without jobs due to India's usurping of jobs. And to those bleeding hearts who highlight scarce attempts of Indian companies hiring in US - don't forget the fact that such job numbers dwarf the amount of jobs that have been outsourced to India. And for those karma-believers who think that one day India will taste its own medicine when they outsource to poorer nations than India - let me tell you something: India is one nation that will never,ever outsource its own jobs to other nations (mickey mouse examples won't count). How the heck can IT folks from US/Canada/UK and other such nations compete with India (and in some cases with Philippines) where wages are so low that if we here in the Western World were to work with such wages, we would need to have 3 jobs to make our ends meet.

samfisher83 10y ago
The wages in india IT are growing at a pretty high rate.
- m23khan 10y ago
  Does DevOps engineer in India make US $120,000? Does Java programmer in India command US $100,000? Does a system admin. in India command US $90,000?
  - abhi3 10y ago
    > Does Java programmer in India command US $100,000? 2500 USD to 15,000 USD http://www.payscale.com/research/IN/Job=Java_Software_Developer_%2F_Programmer/Salary http://www.payscale.com/research/IN/Job=Java_Software_Develo...
    - galuano1 10y ago
      That data is just wrong, and not what people get paid in major IT players, which are more likely to get these projects. The empirical formula for a new hire is $3000 * years of Experience. The median starting Salary is $4500 ~ $5000, and the salary usually caps out at $25000, and people above that payscale are usually considered architects.

throw2016 10y ago

When blue collar workers getting outsourced comments here are usually full of pontification on capitalism and shareholder interest. When it comes to service workers some commentators are nearly gleeful at the prospect of job losses and cost savings by ai never mind it's decades away if at all. Individualism can only take you so far. Without meaningful community and social structures based on common good and mutual respect the lack of empathy and sometimes open disrespect of other peoples life conditions will ultimately come back to bite you.

calvinbhai 10y ago

Many more jobs have been outsourced to India through American companies like HP, IBM, DELL. Is outsourcing a problem worth mentioning only when a company incorporated in India gets such contracts? Or, is there a subtle hint of racial/country bias against Indians? I ask this because I never see such damning articles when whole departments/section of companies are closed when outsourced to American companies. And circumstances are very similar. Older employees cost company more because of America's awesome healthcare and insurance system. Techn knowledge gets commoditised and automated so quickly, these older employees are almost always phased out by outsourcing the jobs. It's just that when the company getting that contract is Indian, all hell breaks loose.

atonse 10y ago
Yup there's definitely a tinge of racism there. Even the word "outsourcing" has a "send it to a cheap third world country" feel to it. I remember talking to an American company who was doing all the design and web development for an Australian company. So I said "ahh so they outsourced and offshored it to you" and they got very defensive about how it wasn't outsourcing. Even though this is the textbook definition of outsourcing and offshoring.
- jordanb 10y ago
  There's an argument that isn't racism here. In AU->US outsourcing, the motivation for outsourcing is not to drive down labor costs, because labor costs are clearly higher in the US. The only reason to outsource from AU to US is if people in the US can do it better. This is the opposite when we talk about outsourcing from an advanced country to a developing country. The rationale is always cost, and specifically cost of labor. It's always about driving the cost of labor downwards. And so workers in the outsourcing country resist---absolutely---because the ultimate aim is to undermine their wages and living standards.
  - p_ 10y ago
    > reason to outsource from AU to US is if people in the US can do it better. That's rarely the case More often it's about follow-the-sun

thewhitetulip 10y ago

Why isn't anyone talking about the lack of funding for universities and educational institutes? Isn't that too a part of the problem? Or is there no lack of funding?

jmcdiesel 10y ago

Can someone give an actual moral reason why this is bad? Can you explain to me why where you geographically located needs to matter? Or why Americans should be or feel entitled to jobs? If someone is willing to do it cheaper, than a business is dumb to pay more just to reinforce nationalism. This weird entitlement around jobs in America is strange to me. I appreciate the living hell out of my job, because I know it could be done by someone outside the US for cheaper (and my Company has a tech office in Bangalore). You can't appreciate something and expect it/be entitled to it at the same time. Regardless of the rest though, that moral question is what matters - what is immoral about hiring people outside of your country? Why is nationalism considered a virtue?

Clanan 10y ago
A few reasons which may or may not apply to this situation. I don't agree with all of them, but they're worth a discussion I suppose. * The "cheaper" country has fewer regulations. e.g. sweatshop labor that the local workforce can't compete with. * The organization profits from the local community, its regulations, and populace but doesn't "give back" through jobs, etc. * The notion of patriotism: as a community, we should put our interests first (and other countries will do the same). Obviously this is a waaaay bigger topic than can be addressed in a bullet point.
- randcraw 10y ago
  Not to mention the sub-standard-vs-US working conditions HCL has in India. Outsourcing to a sweatshop is bad karma.
  - pm90 10y ago
    A lot of the wealth in the west was created in some rather dubious ways viz. colonies and slavery. I wonder whether that wealth would carry "bad karma" as well. The simple truth is that without laws explicitly forbidding businesses from engaging in such practices, the market WILL force them to engage in them. So we change the market using regulations to prevent such sort of a thing.
  - 10y ago

dekhn 10y ago

An important point, not well-covered. The employees worked for UCSF Medical Center, which is a corporation affiliated with UCSF. It's not actually a university- it's a hospital. There is a huge, weird overlap between UCSF and UCSF Health/Medical Center. Also, UCSF Health is known for having merged with Stanford Health (they claimed both of them would go out of business if they didn't merge), laying off its entire staff, then rehiring them with a limited contract, and then un-merging: https://alumni.stanford.edu/get/page/magazine/article/?article_id=40228 https://alumni.stanford.edu/get/page/magazine/article/?artic... (disclaimer: I was a PhD student at UCSF during the debacle).

devoply 10y ago
Sounds like incompetent management led by MBAs gone wild. Imagine all the cost savings guys.
- formula1 10y ago
  I would argue competent and effective management by people who view profits worth more than ensuring everyone can enjoy life. These people aren't idiots, they understand game theory, supply and demand and cost cutting to the point they are paid absurd amounts to do the work they do. In my opinion, techs problem is that the builders/maintainers trust leadership not to cut off their heads. Only friends are safe.
  - devoply 10y ago
    The reason that they are paid a lot is because they can justify their pay in terms of cost-savings. If you have a large company paying tens of millions in salary and you cut out a few jobs you can save the company a million dollars. For that you can justify a 1% pay, say 150k or 250k. Funny thing is the tools are dumb in that they can't actually predict the long-term and mid-term effects of bringing on such a change. And this is a text-book case of that because they have reverted back to independent entities. Like for instance knowledge lost. How do you account for that? Loss of morale? How do you account for that. Communication problems, etc. etc. etc. All these things can be a competitive advantages or disadvantages for a corporation. They can potentially make or break a company. In fact someone should create an AI called MBA AI to do this sort of shit and make a killing doing it. Just replace idiot MBAs with their dumb tools with an AI. It should be simple enough to automate to generate cost saving estimates and so on. Without actually being able to predict the actual outcome in any meaningful way. I will finally add that in the end Jurassic Park was caused by an underpaid IT contractor.

KKKKkkkk1 10y ago

I think it's deceptive to frame this as Indians stealing American jobs. It's more like American engineers are being overpaid at the expense of UCSF patients and CA taxpayers.

ythn 10y ago
American engineers are being overpaid, or Indian engineers are being underpaid?
- KKKKkkkk1 10y ago
  I think this question should be discussed alongside the question of why US healthcare is so expensive and inefficient compared to the rest of the world.
  - dominotw 10y ago
    because we don't do the same thing that we do in IT like importing doctors, meds ect.

a3n 10y ago

Hopefully that school doesn't have a CS or IT program, 'cause that's a pretty strong wave-off for people considering what career to go for.

aphextron 10y ago

Quote from UCSF "... I.T. costs have nearly tripled between 2011 and 2015" This is the real story. The ballooning salaries and cost of living in San Francisco from the tech boom has completely blown UC's budget out of proportion. These people are not downtrodden factory workers in some midwestern town losing their livelihoods. They are highly qualified IT workers in the hottest job market that has ever existed anywhere. They will all have job offers in weeks.