More Twin Cities IT Workers May Soon Be Unemployed
New York-based Thomson Reuters Corp., a global provider of business and legal information services, confirmed Thursday that it plans to outsource its information technology services, and those changes are expected to affect at least some of its 6,700 employees in Eagan.
It laid off 184 employees there in March as part of worldwide job cuts totaling about 3,000 people. The Star Tribune reported that the company said most of its affected employees would transition to the tech services firm it plans to hire, a common business practice but also one companies use to reduce staff and cut costs.
Earlier this year, Wayzata-based Cargill, Inc., Minnesota’s largest private company, announced plans to outsource some of its IT services in a move that would affect about 900 jobs worldwide. Cargill told employees that it would transfer some of its IT functions to India-based Tata Consultancy Services in a transition that will take up to nine months and affect about 300 Twin Cities jobs.
Michael Nolette, owner of the St. Paul-based I.T. consultancy business ShareTech, told Twin Cities Business that although outsourcing has been a popular choice for firms as far back as 15 years ago, the factors influencing their decisions change over time.
“When times are tough they look at it as cost effective: Forget strategy, we’re just trying to save the company. When things are strong, they look at it from a strategic perspective,” Nolette said.
ShareTech primarily provides services for small to mid-size companies, which Nolette said typically make outsourcing permanent to cut costs or refocus their management strategy. Larger companies like Thomson Reuters or Wayzata-based Cargill, Inc., may be better positioned to later bring those services back in house, Nolette said.
A Thomson Reuters spokesman told the Star Tribune that the company has yet to eliminate any positions related to the announcement and that a new vendor would be selected in the fourth quarter.