US lays off jobs to India

Is the University of California defying President Trump?

On 28 February 2017, the University of California, San Francisco (UCSF) laid off 49 Information Technology (IT) employees and outsourced their work to a company based in India. This marks the end a year-long process that has brought the public university under fire. The University announced the plan last July as a way to save $30 million, over five years. UCSF is a centre for health science research, patient care and graduate education.

“There are many ways to save money. This is not the way.” 

                                                          - Bob Zhang, UCSF IT worker

The Politics of Outsourcing

Outsourcing of jobs have become hot-button political issues, in the United States. For many years, US-based employers have cut costs by farming out work to low-cost workers, in other parts of the world.

President Donald Trump campaigned on promises to restore lost US jobs and to penalize companies that move factories overseas. Zoe Lofgren, Democrat Representative from Silicon Valley has introduced a bill in Congress that proposes to double the minimum wage for H1B visa-holders.

Why Pay More for Less?

This is the University of California's first outsourcing. The layoffs were necessary due to rising costs of technology. In addition to the 49 staff layoffs, another 48 positions that were  vacant or filled by contractors were eliminated. UCSF has a US$ 5.4B annual budget and is planning to raise student tuition but top executives in the IT department still want a substantial bonus. The cost-cutting move will save $30 million on a $50 million five-year contract with HCL, a multinational information tech firm headquartered in India. Kevin McCarty Democratic Assemblyman plans to introduce a bill to ban universities from using contractors to move work out of the country.

Assessment

Bringing back employment to the US, was the popular plank on which the US Presidential election was fought. If UCSF has to retain IT jobs in US, it will have to pay for the higher cost of service. Who will bear the cost? Now that President Trump has assumed office, he shall have to bite the bullet.

Why are IT services in India, so much cheaper than in the US?