It's good to talk: Union says IBM failed to consult system support techies as Scottish Power contract nears end

IBMers who provide tech services to ScottishPower have voted "overwhelmingly" for industrial action in a consultative ballot over deepening uncertainty surrounding their jobs. Unison, which represents unionised members, said Big Blue told 65 staff in October that their roles "would end on 30 June, 2020." A spokesman at …

[Pascal Monett]

Well IBM is one problem

It is a well known fact that IBM is having some issues with employees at the moment, and has been for some time.

On the other hand, Scottish Power signed a 10-year contract to have someone else manage its IT ? Where's the rationale in that ? Frankly, this whole outsourcing thing is getting out of hand. You bring in a consultant or two if you do not have the expertise to handle something, but once you've identified the need, you hire the expertise or train somebody you have.

Signing up to pay someone else to take of things for ten years at a time is a waste of money and resources, plain and simple.

[Julz]

Re: Well IBM is one problem

I agree but it does get all those expensive employees off your balance sheet.

[hplasm]

Re: Well IBM is one problem

"I agree but it does get all those expensive employees off your balance sheet."

Whilst paying out twice as much, as OpEx...

[Anonymous Coward]

Re: Well IBM is one problem

That depends on the tax treatment.

Lower taxes, lower salaries and reduced pension liabilities. What's not to like?

[Anonymous Coward]

Re: Well IBM is one problem

Depends on your point of view.

As a short term bonus money grab by a PHB, I am sure they'd be like a pig in shit.

As a now low-paid (or even out of work) techy, I'm sure they'd think its really shit.

As a customer who's now getting a shitty service, I'd think they wouldn't like it at all, and will ultimately take their business elsewhere.

[Killfalcon]

Re: Well IBM is one problem

It's probably mostly about getting away from IBM. My own experience is that no matter the quality of the techies doing the work, IBM's management layera reliably triple the cost to do anything.

[big_D]

Re: Well IBM is one problem

With IT requiring fewer human resources over time to manage, outsourcing can spare a company money, if it is handled properly.

They either need to employ too many people or they need to make them redundant, which if they have been with the company for a long time can be expensive.

Theoretically, the outsourcer can manage the contract with fewer staff and reallocate the rest to other projects, minimizing the redundancies. That certainly worked well on a couple of projects I was involved with. In one, from the around 1,200 staff brought over, nearly 1,100 were still working for the company 10 years later. That was the highest retention/loyalty rate the company had ever seen with any of its outsourcing projects. They were re-allocated to projects elsewhere in the company and were well integrated.

It was only after a downsizing of the whole company 15 years after that outsourcing that a lot of those original employees left.

On the other hand, you have outsourcing that tries to constructively get people to leave after they've been outsourced and move more and more of the contract to cheaper (usually overseas) offices.

For a non-IT company, outsourcing a large pool of IT staff it no longer needs can make economic sense.

As an IT employee, if it is done like the first type, which I experienced, it can be a very positive experience, opening up new avenues, without having to look for a new job and not losing your length of service benefits. If it is just done as a money grab and a way to get rid of employees that neither company wants, it is a very bad thing. Unless the outsourcer has a bad reputation already, it is often a gamble, as to whether it will be a good or bad thing.

[a_yank_lurker]

Re: Well IBM is one problem

Once an organization reaches a critical size it should bring functions like IT in house if they are not already. As the organization grows its internal complexity requires an internally developed/modified solution that is best handled internally. Scottish Power sounds like an organization who should have an internal IT staff.

[Anonymous Coward]

Re: Well IBM is one problem

"With IT requiring fewer human resources over time to manage, outsourcing can spare a company money, if it is handled properly."

Step one for IBM GTS outsourcing: get rid of existing staff (>30% in year 1, ~90% by year 2 through attrition or resource actions) as quickly as possible. If its well documented and the environment is familiar to IBM, there's a chance it will run OK for a while with less people.

Step two: wait for systems to either become unreliable through lack of attention or business requirements to change, requiring an expensive IBM system to address the issue and further embed IBM into the company. Note that ex-employees may not understand the plan yet and may fix the issues

Step three: if the customer doesn't buy new IBM recommended systems, "offshore" more positions - destination is unimportant as IBM won't hire anyone there either. Goto step four

Step four: the company realises it must escape IBM. There's no obvious way to get to step 4 as you either have to wait out the contract with no significant IT changes and rebuild IT from scratch or purchase IBM systems ensuring your co-dependence.

[big_D]

Re: Well IBM is one problem

I'm not saying this deal was good, or that IBM is a good partner for this.

Just that if the outsourcing is done properly and a conciencious partner is found, it can work out well for everybody involved.

The problem is that there are more cowboys around, like IBM, Accenture etc. these days that are just out for a quick buck, rather than those rarified few who do it properly.

[Anonymous Coward]

Re: Well IBM is one problem

Sorry, but I think you are looking at this with rose tinted glasses..

Outsourcing is rarely done to improve anything but the bonus of the PHB and dividends for the shareholders. While I am sure you are right when it comes to small size businesses that do not rely on IT for their core business (and I say that because I personally think the owners of the smaller business do generally care more about their customers), when it comes to larger outfits I would hedge my bets otherwise.

[Velv]

Re: Well IBM is one problem

"Signing up to pay someone else to take of things for ten years at a time is a waste of money and resources,"

Sometime it isn't purely about the immediate money.

I worked for a large organisation where the IT support budget was a black hole, an expense the business had to pay without understanding what they were paying for Project changes were constant and true costs were obscured in the project/maintenance/operations mashup.

By outsourcing IT Support it was possible to demonstrate just what, or more importantly, what the business was not getting for its money. It took many years for the business to agree up front exactly what it wanted and stop changing the goalposts every six months. 10 years outsourced and support was brought back in house under control.

I'm not defending outsourcing, its a shitty experience for most people, but it is sometimes the best was to achieve a business outcome.

[Anonymous Coward]

I second the motion of their being a problem, not just with IBM

Well, I moved to Scottish power as my provider on moving to a new rental property.

Moving the bills from the current person (landlord) to myself took 4 months and innumerable phone calls and emails. They had to have a specialist team look at it, possibly after they came back from the pub going by the efficiency of the process.

All this time they were neglecting to take direct debits , so when it was finally sorted, they sent a bill for 4 month gas and electric.

Pretty useless on the whole, going to move at the end of the contract.

[Anonymous Coward]

Re: I second the motion of their being a problem, not just with IBM

You got to defer gas and electric payments for 4 months, interest free, and are complaining? Hmmph.

[roblightbody]

Outsourcing always sounds like it makes perfect sense - in theory. In practice, on the ground, I've never seen it do anything except add complexity, delays, costs, frustrations - ultimately just slowing everything down.

[Cederic]

no TUPE then

They appear to want Scottish Power to choose to recruit new staff, because who would TUPE in a bunch of strikers.

It's not even as though IBM redundancy terms are generous these days either.

[SuperFrog]

Outsourcing is a game for two

I've never seen outsourcing work well. Most companies that hire outsourcers don't have enough expertise to manage the contracts. I also feel that with insourced employees there is a sense of ownership and I can manage a shop with less people than I would need with a contractor. One thing that has worked for us is direct contracting. So instead of outsourcing an entire team, you contract for overnight work, or for a special need like storage networking. Just makes more sense.

[Erik4872]

Re: Outsourcing is a game for two

Total hands-off "give us your IT and we'll put half the population of India on it" outsourcing isn't playing as well as it did back in the 2000s. You still see it from time to time...financial institutions seem to be mired in an outsourcing mess they refuse to fix by in-housing. Most companies that have some sort of strategic advantage with their IT don't do this anymore. Non-IT companies, or those that are just using O365 and a few other commodity tools...it's on the wane but there are CIOs who will parachute in and promise millions in savings.

When companies just give over everything, you see the messes that are highly publicized. Margin pressure causes the outsourcer to hire cheaper and cheaper workers, reducing service quality and removing any hope that your problems will be their priority. It works great until they've cut just enough to avoid losing the contract, but so much that doing anything is impossibly hard now.

[Anonymous Coward]

Re: Outsourcing is a game for two

It's worth looking at which financial firms have outsourced to IBM etc. and are now recruiting their own IT again.

[Giles C]

Re: Outsourcing is a game for two

When I started at Thomas cook (just a year before it folded) we were brought in to bring the network back into local control as the outsourcing was a overcharged mess - there was a maintenance fee on every vpn charged per month!

They had also outsourced

Desktop support

Server maintenance

Data centre firewalls

Data centre maintenance

Store systems

And a lot of the core applications

Bringing in the network management saved £5million in one year.

The other big problem with outsourcing is that the company will do just the minimum needed for the contract, I will always check before doing changes to a firewall that the change is required they will just do exactly what is asked of them, no matter how stupid it turns out to be,

[Doctor Syntax]

Unison recommends those employees decide to back a strike, and said it is "pursuing legal action against IBM on failure to consult on TUPE regulations."

Taking legal action - fine. But from Scottish Power's perspective it doesn't matter whether the strike's against IBM or themselves, they're in the firing line. There's a lot to be said from their PoV for an arrangement that continues to be staffed by those who already know the job but they'll now be balancing that against the fact that they've been on the receiving end of the strike action by those same people. Perhaps a more positive action would have been to lobby Scottish Power to make sure what ever arrangement follows uses the same staff.

[Anonymous Coward]

It seems Scottish Power is for sale.

Why else would they destroy all their retained IT knowledge?

[Anonymous Coward]

Re: It seems Scottish Power is for sale.

because they sold out in the past and the Energy Networks division is now suffering from lack of internal IT knowledge and support. Iberdrola dont seem to remember that SP is also support part of the Nat Grid.

[Anonymous Coward]

This is actually a fall out between Iberdrola (the spanish company that now owns SP) and IBM, has nothing to do with SP in reality as the decision has been made at a higher level.

[eldakka]

SP chose to outsorce and expose themselves to this situation. And since these staff, while working for IBM, are supplying SP's IT services, SP will be on the receiving end of the fallout (well, probably, SP's own customers will be at the end of the chain).

[Anonymous Coward]

I'm confused

I'm confused - no really - answers welcome.

So the contract was for 10 years and is coming to end. That's not disputed.

And IBM have told staff that their services are not required after that end date. [I assume this was formal notice of redundancy - it's not clear.]

But Scottish Power have not indicated how they intend to continue to support their IT systems.

And because of this, the workers are putting their redundancy at risk by going on strike? Why would you do that rather than ask the Union to lobby Scottish Power for an answer?

And if Scottish Power really think they have an answer that doesn't involve the current staff then striking will make no difference whatsoever.

[Anonymous Coward]

Re: I'm confused

Hi confused

The current staff are currently screwed - striking is there only real hope of getting a better deal by either IBM being made to realise they can't escape UK employment law or (from the workers point of view) Scottish Power realises they still need someone to support them and either renew the contract with IBM for a few more years or even better, Scottish Power takes some or all of them on to continue the service.

The alternative is going to work each day, doing your job, knowing in six months time that it will end and that you didn't fight to save your job so no one will want to fight for more redundancy and now there is nothing let to do. IBM's gone. Scottish Power don't need you. Nothing...

Both paths are ultimately futile, but which one would you take?

Have a nice weekend.

[Anonymous Coward]

Re: I'm confused

> IBM being made to realise they can't escape UK employment law

Still confused. IBM are complying with UK employment law by giving notice.

What else is there to 'escape'? Do the union think that IBM is deliberately not asking about future arrangements so they don't have to start TUPE negotiations? Or do IBM genuinely not know because Scottish Power is taking it to the wire regarding appointing a new supplier?

[Anonymous Coward]

Re: I'm confused

It’s not certain from the article that IBM have given notice to their employees, and whether they are complying with UK employment law. Back when I was at a large outsourcing company, HR was offshored and were absolutely clueless of UK employment law.

[Anonymous Coward]

Re: I'm confused

"Still confused. IBM are complying with UK employment law by giving notice."

In most cases, they loosely comply - almost meeting the letter of the law but rarely the spirit of the law.

And unless you check outstanding leave, whether they have not paid for sick leave, payments for UK holidays, overtime/time-in-lieu and even redundancy based on on your period of employment. When more than 50% of people have complaints (possibly higher, not everyone disclosed the fact at the time), it almost feels deliberate...

Of course, they would never take action against IBM independently.

[eldakka]

Re: I'm confused

IBM still have 10 months (or so, maybe 7, not clear if the 3 months that staff have known about this are from the 10 months left to run in the contract or if that 10 months is after that 3 month period) remaining in their contract with SP. If the IBM staff supporting the SP contract systems all go on strike, then IBM (probably) will be unable to perform their contractual agreements with SP. Strike actions against IBM don't abrograte IBM's repsonsibilities to SP under the outsourcing contracts.

Since these are SP's IT systems that (probably) control most of SP's operations, e.g billing and payments of their power supply customers, billing and payments of their own suppliers who supply them with power to distribute,and so on, SP will be screwed. If SP get screwed by IBM, SP will start levying massive penalty payments against IBM. If the degradation in service is serious and ongoing, 6 months worth of penalty payments that IBM has to pay under contract would probably cost more than the entire 10-year profit margin on the contract. And that's before the lawsuits start if SP's service is disrupted enough to cause from SP's own clients to start suing due to disruptions to them.

Therefore if the stike becomes extended, it could cost IBM massive amounts of money. And the strike will probably only end with an agreement acceptable to the staff, which would, I hope, include conditions on IBM that would require some sort of redeployment or massive redundancy payments or other retirement benefits.

[Korev]

Re: I'm confused

>The alternative is going to work each day, doing your job, knowing in six months time that it will end

Or spending a few months brushing up your skills etc for your CV, taking the redundancy cheque to pay off a bit of your mortgage before moving on?

[Lorribot]

TUPE is a a somewhat problematic area.

It would seem to me it is for things like Train franchises where the income Franchisee would take on the existing staff and just run with it, rather than IT contracts but even in those cases you are just perpetuating bad employees, working practices and having to fund and all their chattels such as pension rights, benefits and terms and conditions with out being able to clean sheet.

People working in these sort of limited time contracts should also be on limited contracts, this gives the incoming company a chance to actually do something different and make changes unencumbered by poor management and employee selection of teh previous company.

Is it any wonder our train franchises fail time after time, would anyone else who took over Southern Rail be able to do any better given teh mess they wouldl have to take on with out the ability of a fresh start?

[katrinab]

There aren’t that many unemployed train drivers out there, and even if there were, they would still need to do route and type training.

[Anonymous Coward]

They *should* all be made redundant

Anyone who worked on Scottish Power IT *should* all be made redundant. Their IT is a load of shite, and the customer service reps seem to be completely unable to deal with problems, even in such simple things as getting an e-mail address that was incorrectly entered into their system corrected.

[Aristotles slow and dimwitted horse]

90% of the 65...

I presume then that there is one guy who just can't seem to make his mind up?

[Anonymous Coward]

Interesting. Did not know TUPE consultation was mandatory, could set a precedence for many other orgs that did not give employees option to TUPE

Or do you need to be in a Union to get treated fairly?