By on April 2, 2008

tcs_logo_cmyk.jpgIn February, we told you Chrysler was outsourcing some of its IT to Tata Consultantcy Services (yep, relation!). At that time, Chrysler Chief Information Officer Jan Bertsch promised to "keep [the employees] apprised of the outcomes of our efforts." Well, now the Detroit Free Press tells the rest of us what some of those "outcomes" are: people got fired. Everyone knew it was the plan, but now it's happened.  Chrysler is outsourcing 200 of its full-time employees, some 20 percent of its IT workforce. Ms Bertsch explains: "we thought a year ago that rather than try to cost-cut continually over time, we wanted to step back and look at our business and say, 'Where do we really need to move to service our customers better?'" Without over-analyzing that little insight into the Chrysler management paradigm, this means that recently-signed contracts with Tata and Computer Sciences Corp will eliminate the need for in-house mainframe and computer technology service. No word on how much Chrysler is saving, but Ms Bertsch assures us that "We would have never embarked on this scale of a project had the savings not been substantial." Not to worry though. "Some people will stay, some people will leave and some people will be interviewing with the new provider and perhaps be offered a position with them," purrs the "Chief (Orwellian) Information Officer." Aw.

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20 Comments on “Chrysler Outsources IT Jobs...”


  • avatar
    50merc

    “…we wanted to step back and look at our business and say, ‘Where do we really need to move to service our customers better?\'”

    Ms. Bertsch should have used the word “serve” instead of “service.” Chrysler’s objective is to serve the customer; that is, meet his or her needs and wishes. In contrast, “service” is what a bull does to a cow.

    Oh, wait…

  • avatar

    In contrast, “service” is what a bull does to a cow.

    In this case, it’s a ram doing it to a canine.

  • avatar
    Edward Niedermeyer

    drifter:
    Because people lost their jobs. I know, I know, it seems so inconsequential…

  • avatar
    Orian

    Uh, they won’t be going to India to work, that’s for damn sure.

    India is supportive of bringing IT there, but don’t think of going over there and getting a job as an American. They’re fine sending people here to work, but not the other the way around.

  • avatar
    golden2husky

    Let’s see: When new environmental regulations are proposed, industry executives complain that the regulations will be so expensive that they will result in the loss of American jobs. Yet, the first chance that they can outsource jobs, they do so in the name of needing to remain “competitive”. So what they are really saying is, I want to maximize what I make, and screw everybody else. Ah, the classic short sighted American business model. No wonder Japan kicks America’s ass. We are on an express train to third class status.

  • avatar
    windswords

    IT is my field so I think I can shed some light on this. I have 25 years experience in the field working for (mostly) Fortune 500 companies in every capacity – full time employee, full time employee of a consulting company, ‘freelance’ employee of a consulting company (only an employee as long as the contract lasts), and as an independent business.

    First companies do this sort of thing because they think it will save them money. They make all kinds of projections about how much bucks they are going to save and maybe management gets a bonus for ‘performance’.

    But the reality is often different. Technical knowledge alone is not enough to do this job. You need knowledge about the business in general and that clients business process in particular. Then there is the distance barrier. The world is shrinking, but nothing can replace working face to face with people on a daily basis. It just adds a layer of complexity when you are working with a team a great distance sway, especially if they are in another time zone. Then there is the language/cultural barrier. Even if the worker is onsite AND speaks good English there can be issues. We have a very qualified lady at work on a different team than I and she was ready to strangle this one foreign contractor because he was so dismissive of her and always talking down to her. In my experience the work done by off shore IT is never as good as what was done in house. And the mistakes and miscues cost real money, but it is not easy to quantify and therefore goes unnoticed by upper management.
    Even when the off shore team works as supplement to the in house staff as part of a large project there can be problems. Last year we worked with and Indian contracting firm to convert a major system to a new machine and operating system. A year later I am still fixing problems, some of them because of in my opinion, shoddy workmanship.

    Most companies today know it’s unwise to just give everything away to another firm. So they outsource only limited functions (like help desk – or customer service for non-IT) that don’t have a high skillset. That’s maybe why Chrysler is only doing this for 20% of their IT staff. Others, once they bite this apple, end up doing more and more until they have little left in house.

    Second I should point out that IT is not like manufacturing, that is, it’s not a zero sum game. In manufacturing, if they move the plant to China, that’s it, you’re done, out of job. In IT there are some options. Some of the workers will stay because they have skillsets that cannot be easily outsourced. Others will be hired by the outsourcing company as onsite representatives. Others will be hired by local contracting firms and end up working at the same company that let them go because they are an ‘expert’ in a particular system (of course they were never considered an expert when they were an employee – what’s that saying about a prophet is without honor in his own country?). Some will have to find jobs with other companies and even move, but at least IT is a transferable skillset like vocational skills (plumbing, electrician etc.). And IT workers can learn new skillsets if they have too. For a low skilled factory worker to be laid off is particularly devastating.

    Many times after the initial contract expires with the outsourcer (the contracts are usually short too) the price of renewal goes up significantly. What are you gonna do? They got you by the short and curlies. The worst thing about these arrangements is it is very difficult (and expensive) once you have outsourced your IT functions to get them back in house. Most of the people you let go have moved on to other jobs (and some have moved physically as well) and even if they are available, do you think they want to come back and work for the same business that thought they were so disposable in the first place? I wouldn’t. Unless they waved some significant dinero in my face.

  • avatar
    Gregzilla

    I worked for GE for 13 years. Outsourcing customer service to India was, well, it was what we did. Why pay some housewife $25K per year when you could pay $21 per week to a college graduate 12 time zones away whose name was Nancy or Nick. I mean, who would notice? The next step will be the commercials touting the Six Sigma manufacturing processes and the “Workouts”. Lay-offs are not called layoffs anymore, they’re called “headcount reductions”. Fortunately for me, the “meatball” tattoo has finally begun to fade……it’s actually funnier when it’s happening to someone else…..

  • avatar
    bunkie

    In another thread, I made the comment that the Jaguar XF was now out of consideration because of it now being a TATA product. That drew some criticism.

    I’m in IT, with a resume that sounds very much like that of Windswords. I can not, in good conscience support mindless outsourcing. There is a prevailing anti-high-wage sentiment in much of this community. To that I would say that we would do well to remember that Henry Ford understood that his employees were also his customers. At what point do we get to where only well-off people can afford to buy new cars? Is it now? We read about falling sales across the board and I have to say that for the first time, I’m wondering if this is more than just a recession.

    I think that this fear underlies my discomfort with the level of bad news that makes up so much of the truth here at TTAC.

  • avatar
    taxman100

    It goes in cycles. In my profession, I’ve been outsourced twice. I’ve alwyas found a new job with better pay, and my old employer ends up bringing the function back in house a few years later, only they end up paying a ton to hire new employees.

    But for a couple of years, the genius up in executive management gets a nice bonus before moving on.

  • avatar
    Wolven

    Why doesn’t CLLC just outsource the entire design, manufactureing, sales, advertising and accounting to Tata, or some other 3rd world country where it’s “cheep”. Just think of how much they could save then. Better yet, why doesn’t Cerberus just move themselves to India, Pakistan, China or Russia? Isn’t it just wonderful that Chrysler and Cerberus are “American” companies?

    On the other hand, why is it no one ever points out WHY doing anything in Amerika is so expensive? What does the ever increasing taxation in Amerika do to the cost of EVERYTHING? Just exactly what percentage of our incomes does the government think it needs? 100% ? 110% ? By the way, what exactly was the reason for the original American Revolution?

  • avatar
    roamer

    I’m with windswords and bunkie. Like them, I’m in the business (although not as long as they) and have seen this tune sung before. A company will react to a poor quarterly result by looking to reduce headcount., Naturally it will look at cost centers first and IT, by it’s very nature, is a cost center.

    So they will reduce headcount in the organization by outsourcing – swapping bodies inside the company for presumably equally competent bodies outside of it.

    The problem is that the new bodies cannot and will not be as capable as the people they are replacing.

    They may have equal technical skills, but they will lack both the technical tribal knowledge the company, and the knowledge of the company itself and the type of business it is in. Someone with 10 years of IT experience at Chrysler has knowledge of the systems, the company, and the industry itself that cannot be replicated without years of effort.

    The drop in the quality of work is immediately evident to the rest of the IT department, who are forced to increase their workload while wondering if their jobs are next. In this environment a company that is not decisive (and convincing) in reassuring the rest of the department that their jobs are safe will begin losing their best performers. I’ve observed this up close and personally, and it’s never pretty to watch.

    And like bunkie , I’m beginning to wonder just how bad things in this country are going to get.

  • avatar
    ronin

    Ha, ha, we’re exorted to buy American, but the automakers themselves do not. We’re exorted to join ranks with downtrodden autoworker union members, but they themselves do not close ranks with their office working brethren. Hahaha.

  • avatar
    windswords

    Romer,
    “technical tribal knowledge the company”, that’s a great phrase, I’m gonna use that for now on.

    taxman100:
    “But for a couple of years, the genius up in executive management gets a nice bonus before moving on.”

    I was contracting at DuPont (as a ‘freelancer’) when they announced that all IT was being ‘insourced’ to Arthur Anderson. Insourcing is where you give the function away to another company and they retain most of your staff and often use your facilities as well. So you work with the same people but now they work for the other company. Often the pay is comparable but the bennies are not. This was supposed to save them big bucks and the CIO made the cover of Information Week magazine as “CIO of the Year” (CIOOTY?). Some of these people had been DuPonters all their lives, and they were not happy about this. A couple of years later my old contacts told me that the savings had not materialized and the CIO had been replaced/moved on.

  • avatar
    GS650G

    “People are are greatest asset.”

    If you believe that I have a Volt to sell you.

  • avatar
    lewissalem

    Man, I’m glad I left GM, then Ford, then Michigan in 2000. I would never have survived the rounds upon rounds of layoffs. The truth is, they don’t want to have to pay benefits to these employees. I predict a few will be hired back as contractors to “train” their replacements.

  • avatar
    Wulv

    Just another way to say ” we do not care about the customer at all, nor any of our employees”. Outsourcing has been going on for years now, and has proven to be a detriment in more ways than one. Look at almost all of the companies that started it, and where their support rating are now. Dell used to tout themselves as being the service leader etc in the late 90’s, as soon as they started to outsource, the quality of their support plummeted to the point where it cost them a ton of sales. I have personally been involved in large purchases of computer hardware, and people think Dell first a lot of the time. We have had such bad experiences with Dell support for multiple items, that our management finally got the hint and started shopping elsewhere.
    Being in the IT industry, like others here, we KNOW it doesn’t work well, and hasn’t for a long while.

  • avatar
    Steve_K

    Another IT person here. I echo the sentiments of everyone so far. What usually happens is a group of know-nothing managers find a page from the book of shotgun management and run with it. What’s going to happen can be summarized as: “They’re going to be SO pissed.” By They I mean everyone involved. It will be more costly and be less productive in the long run. IT departments are the stepchild in every business around the world, seen as a pure liability by the exec’s and hence disrespected and undervalued.

  • avatar
    blautens

    Another 20 year corporate IT person here – I’ve done it all – contractor, full time employee, and something in between.

    I think this decision makes perfect sense, in a perverse sort of way. Oh, I’ve seen companies I work for cycle through the processes. Outsource, insource, contract, rehire. Doesn’t matter to me – I seem to always do just fine.

    Chrysler figures IT is so far removed from what their customer touches that it’s an easy way to cut expenses.

    Outsourcing always results in lower performance, but doesn’t this make perfect sense for Chrysler? If Chrysler doesn’t care about the very quality of the core product the customer buys, why would they possibly care about the infrastructure that runs their business?

    See? Makes sense that Chrysler would do this. I’m not saying it’s the right thing…(far from it). I just see it as a logical move for the company based on their past performance.

  • avatar
    pb35

    I worked for The Home Depot (in IT) under Nardelli’s reign and my position was outsourced to TCS. It was part of my job was to train the Indian newbies, or as I called it “digging my grave.” I was promoted for my trouble but I got the hell out shortly thereafter.

    All of the HD jobs were brought back stateside a few months after I left. It was a colossal failure. Good luck Chrysler.

  • avatar
    yankinwaoz

    I’m another IT veteran with 25 years. I too have seen the foolishness of outsourcing IT to India. I can’t think of one instance where it has either not (a) failed, (b) cost more, (c) had a serious impact on the quality of the company’s core business.

    The beancounters can’t see the impact poor IT services has on the rest of the company’s productivity and on customer satisfaction. It doesn’t take long to find out. Within 12 months they find that their payroll expenses have gone up past the savings from outsourcing. They also find customers will start leaving.

    And as usual, the Pointed-Haired manager who did this is long gone by the time the s**t hits the fan.

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