IT layoffs at insurance firm are a 'never-ending funeral'

Workers train replacements as some IT duties shift overseas

leading through layoffs
Credit: ThinkStock

The IT layoffs at MassMutual Financial Group will happen over a period of many months, and it's going to be painful for employees.

Employees say they are training overseas workers via Web conferencing sessions. There are contractors in the office as well, some of whom may be working on temporary H-1B visas. Employees say they notice more foreign workers in the hallways.

Approximately 100 employees are affected. They work in IT support and infrastructure, which includes managing operating systems, virtualization, databases and other systems.

The employees are angry but can't show it. A loss of composure, anything other than quiet acquiescence, means risking two weeks of severance pay for each year on the job. But maintaining composure is hard to do.

"I know a few people that are probably close to a breakdown," said one IT employee.

Many employees are over the ages of 40 and 50, and have worked for years at the firm. Some have been rebadged to Cognizant Technology Solutions, a U.S.-based IT services contractor and major user of H-1B visa workers. Most of the layoffs are expected to take place between June and October, say employees, but the company put the entire process at around 18 months.

A second IT employee described the emotional impact of the layoffs on employees in this way: "It's like a never-ending funeral."

Two MassMutual employees were contacted directly by Computerworld. A third was reached through Sara Blackwell, a Florida labor attorney, who began hearing from MassMutual employees before the layoffs were officially announced. None of the employees wanted to be identified by name.

When local Massachusetts media first reported the layoffs in early April, MassMutual didn't disclose the name of the contractor, or explain that some of the work was moving overseas. Employees have had to sign nondisclosure agreements as part of their severance, and were told not to talk to outsiders. These kinds of gag orders have been criticized by lawmakers.

When MassMutual was asked by Computerworld about employee claims that they have to train their replacements, a spokesman said this "is not correct." He declined to elaborate.

Despite the denial, it appears to be going on, only by a different name. The outsourcing industry generally calls the process "knowledge transfer." At MassMutual, the term is "transitioning knowledge," say employees.

The argument for calling this transitioning knowledge, versus training your replacement, is that the contractors know the underlying technology and applications and are not in need of technical training. Instead, employees are passing along specific processes, methods and knowledge unique to the client company. But IT professionals subject to this are adamant about calling it what it is: Training your replacement.

The "knowledge transfer" argument was used after Cognizant was hired by EmblemHealth in New York. The company is cutting some 200 IT employees in a plan to outsource their jobs. Emblem refuted the idea that its employees were training their replacements.

"It truly is a knowledge transfer, it's not training," an Emblem spokeswoman told Crain's New York in April.

Employees who have been through "knowledge transfer" said there is no real back-and-forth discussion. "It's like talking to a wall," said a former Cengage Learning IT employee, in an interview last week, who trained her contractor replacements. "They are just recording it," she said. She lost her job after that firm shifted its work to a contractor.

"The whole process is very dehumanizing," said the second IT employee at MassMutual.

In the case of MassMutual, the Web sessions are typically followed with in-person shadowing, where the contractors and client IT employees take turns following each other.

Another reason for the industry to call this knowledge transfer versus replacement training is to try to blunt the criticism over the use of foreign workers.

MassMutual IT employees believe visa workers are on-site at the Springfield, Mass. offices. Some of these workers recently arrived from India, said two employees. The idea that there are visa workers at this site is supported by multiple Labor Condition Application (LCA) filings, which include salaries for visa workers and have been filed for the Springfield workplace, according to the online database maintained by MyVisaJobs.

The original intent of the now 26-year-old H-1B visa program was to make foreign workers available to meet specific skill needs when a U.S. worker wasn't available. But the major users of the visa are offshore outsourcing firms.

IT employees at multiple firms, from different contractors, have voiced complaints similar to those from the MassMutual employees. But the practice is legal, and the Department of Labor has told lawmakers that it has no grounds for enforcement action.

The MassMutual employees are either getting laid off over an 18-month transition, or are being rebadged as Cognizant employees. Any employee rejecting a job with Cognizant is left without severance. Rebadged employees get a one-year contract.

In response to queries about its actions, MassMutual released a statement similar to what it released in April to local media. The firm "continually reviews its operations to ensure we are operating as efficiently and effectively as possible to deliver the greatest value to our policyowners and customers. At times, these decisions impact our staffing levels and when they do, we are committed to a thoughtful and respectful process. While decisions like this are never easy, such activities are necessary to meet the evolving needs of our customers and compete as effectively as possible both today and in the future."

MassMutual says it is "growing and hiring," and the effected IT employees can apply for other jobs at the company. Employees say that there is little expectation that many will find other jobs at MassMutual, or that those rebadged to Cognizant will become long-term employees of Cognizant. MassMutual laid off 360 employees earlier in the year.

Employees believe the motivation for outsourcing IT services is cost savings. MassMutual ended 2015 reporting sales of whole life insurance up 15% from the prior year, "the 10th consecutive year of record results." The firm's CEO, Roger Crandall, received a 21% raise last year to nearly $12 million, reported The Boston Globe.

In the absence of action by Congress to the use of visa workers in offshore outsourcing engagements, multiple lawsuits have been filed challenging the use of foreign workers to displace U.S. workers.

Blackwell has embarked on one such effort. She is representing Walt Disney Parks & Resort IT employees who have filed lawsuits against the contractors there, which includes Cognizant. Some 250 IT employees at Disney were displaced last year.

The lawsuits allege that Disney and the contractors engaged in a "conspiracy to displace U.S. workers" with foreign visa-holding workers and makes it claims under the Federal Racketeer Influenced and Corrupt Organizations Act (RICO).

Disney, in a motion for dismissal recently filed in federal court in Tampa, Fla., said the goal was to transition its "IT department from one concentrated on maintaining existing IT systems to one more focused on developing new technologies" and denies that there was anything unlawful. It argues that the allegations of conspiracy are unsupported, and what occurred was an ordinary business arrangement. Cognizant has filed a motion for dismissal as well. These motions are pending.

Blackwell sent the company a letter, on behalf of an organization she heads called Protecting U.S. Workers, attempting to dissuade MassMutual from its course of action. It did not respond to her letter. Blackwell wrote, in part, "Come out as an American insurance company who stands with the Americans, not against them."

This story, "IT layoffs at insurance firm are a 'never-ending funeral' " was originally published by Computerworld.

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