The LuLac Edition #1274, Aug. 22nd, 2010
Man sometimes this website writes itself. With the political campaigns on the cusp of ramping up, there really isn’t a lot of big news. The Mosque controversy goes on and no one else in LuLac land has been indicted or sentenced. On a sleepy, lazy Sunday though the outrage comes in the form of health insurance. Today we find that Highmark Blue Shield, the parent company of the 4 Blue Crosses in the state is sending jobs to India!! With unemployment the highest its ever been in the Keystone State, people scratching for a living wage, and health care being an issue that continually needs education and explanation, Highmark is sending jobs to another country. OUTSOURCING!!!
Taking jobs away from your friends and neighbors. Taking jobs away from College graduates. When I was laid off from Blue Cross in February of ’09 with 92 others, I wondered why one of the largest contingents of “right sized” jobs were from the IT Department. Now I understand why.
Highmark and the Blues aren’t just any insurance company. They are home town products with member dues that come from employers, employees of those companies, senior citizens who buy Medicare Supplement plans as well as working people who buy individual plans. All of that money comes from Pennsylvania taxpayers.
Here’s a key paragraph in the story that sums it up:
As a homegrown nonprofit that operates at the pleasure of the Blue Cross Blue Shield Association and the state Insurance Department, Highmark and other Blues claim a charitable mission and, in return for that charitable work, receive a variety of tax breaks from the state and the city. People outside the company, as well as inside, question sending work -- and, in effect, jobs -- to India.
The State Insurance Commission, if it had any backbone would do something. But it won’t. Words fail me on this one. Here’s the article from the Post Gazatte.
Top Pittsburgh health insurer Highmark Inc. has notified employees that it will be off-shoring some of its technology work to India, and is simultaneously asking for buyouts among its tech workers and analysts.
Highmark is working with Houston's Accenture, a global tech services and outsourcing company, whose India Delivery Centers will perform the IT work being outsourced.
Memos distributed internally at Highmark say the company must reduce its per-member, per-month costs "in order to remain competitive. We cannot do business competitively within our present cost structure."
"We anticipate this new [India Delivery Center] contract will not only provide additional flexibility in adding or reassigning staff, but more importantly help keep our projects within budget," a Highmark official said, in an announcement on the company's intranet site.
Some of the work is now under way, while other elements of the new Accenture pact are still being finalized.
Highmark spokesman Michael Weinstein said that in recent months: "One of many options Highmark has been exploring is the possibility of outsourcing and off-shoring a limited number of operations function and a limited number of technology activities. Highmark has a preliminary agreement with Accenture to perform systems development work."
It's not uncommon for companies of Highmark's size (it has a statewide employee footprint of about 10,000 people, with many of the tech employees based in Harrisburg) to outsource certain functions, either domestically or overseas, nor is it unusual for large insurers, or even Blue Cross-Blue Shield insurers, to do the same.
This year, Blue Cross and Blue Shield of North Carolina began outsourcing some IT jobs to India through a Boston firm. In the last decade, the Internet and improved telecommunications infrastructure have made it easier to send work offshore.
The University of Pittsburgh Medical Center, somewhat of a rival to Highmark since it began offering a health plan of its own, has lots of employees overseas, though those are primarily due to UPMC's numerous foreign health centers and hospitals. UPMC also has its own International and Commercial Services Division, a collection of for-profit health companies that operate in global markets.
Still, as a homegrown nonprofit that operates at the pleasure of the Blue Cross Blue Shield Association and the state Insurance Department, Highmark and other Blues claim a charitable mission and, in return for that charitable work, receive a variety of tax breaks from the state and the city. People outside the company, as well as inside, question sending work -- and, in effect, jobs -- to India.
"I find it outrageous," said state Rep. Anthony DeLuca, D-Penn Hills, chairman of the House Insurance Committee.
"It might not be a major outsourcing for them, but once they start doing it, it's only a matter of time before [they outsource more work]. ... I find it ironic that they would outsource IT jobs, or any jobs, when we have a vast amount of unemployed workers who could do the job in Western Pennsylvania," he said.
The deal with Accenture is a continuation of a long-standing business partnership between the two companies. Accenture had already done some IT projects for Highmark, and some of the work now being tasked to Indian workers had previously been outsourced to Accenture's San Antonio work center.
The move rubs many the wrong way in that Highmark is paying overseas workers with premium money that largely comes from Pennsylvania companies and policyholders, and also from American taxpayers, since so much of Highmark's business is tied to Medicare, Medicaid and military benefits.
"With all due respect to the people of India, they do not pay taxes or contribute to our economy," one Highmark employee said. He didn't want his name to be published because most Highmark employees are forbidden from talking to the media.
Especially galling to some at Highmark is that the insurer recently informed its work force that it had begun a voluntary downsizing of its information systems work force by more than 100 people.
Highmark says the downsizing and the outsourcing are unrelated. Mr. Weinstein said Accenture's contract work "will supplement Highmark resources, and will not have an impact on Highmark staffing levels."
The insurer is offering "enhanced severance" packages to selected application developers, database administrators and network analysts, and hopes to trim 111 jobs.
Buyouts also had been offered to others in the company; Highmark said earlier this year that it was seeking to eliminate 300 positions. But the company noted that, despite administrative and IT cuts, Highmark has been creating jobs in other realms, notably at its Highmark Direct retail stores and in its for-profit retail eyewear shops.
Accenture is one of the top outsourcing and off-shoring firms in the United States, and has had operations in India since 1987. Today it supplies about 1,200 clients with IT and back-office workers, who typically cost far less than American workers in terms of salary and benefits.
The Post-Gazette reported earlier this year that Highmark was considering off-shoring some work. At the time, Highmark said off-shoring was one of many cost-cutting initiatives being considered, necessitated by rising costs and a need to remain competitive in an increasingly consumer-driven marketplace, especially when the full health care reform package takes effect in 2014.
Bill Toland: 412-263-2625.