Disney criticized for outsourcing IT in Orlando

Posted Thursday, June 4, 2015 11:40 AM | Contributed by Jeff

About 250 Disney employees were told in late October that they would be laid off. Many of their jobs were transferred to immigrants on temporary visas for highly skilled technical workers, who were brought in by an outsourcing firm based in India. Over the next three months, some Disney employees were required to train their replacements to do the jobs they had lost.

Read more from The New York Times.

Thursday, June 4, 2015 3:17 PM

In late November, this former employee received his annual performance review, which he provided to The New York Times. His supervisor, who was not aware the man was scheduled for layoff, wrote that because of his superior skills and “outstanding” work, he had saved the company thousands of dollars. The supervisor added that he was looking forward to another highly productive year of having the employee on the team.

The employee got a raise. His severance pay had to be recalculated to include it.

Onion'd:
Man Celebrates Raise Company Will Eventually Use To Justify Firing Him

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Thursday, June 4, 2015 8:38 PM

The thing about this story, and many similar stories, is that there's a segment of IT that is pretty regularly being outsourced now, specifically the support of old software technologies and almost all of the infrastructure. It doesn't make that much financial sense to keep that stuff in-house. By contrast, current software development doesn't have the talent pool in the US to get all of the work done. The problem is that the people losing their jobs can't easily retrain to the in-demand jobs. They're just different skill sets. That's why Disney truthfully says they've net added jobs. It is what it is... the choice is to retrain (which current software developers have to do continuously, I might add) or find yourself not working.

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Friday, June 5, 2015 12:54 AM

But unions are bad, right?

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Friday, June 5, 2015 7:57 AM

Do you really need unions for a profession where people are in demand and routinely make six figures? A union can't fix a market condition where talent supply is too high for jobs of moderate skill requirements. Ask the auto industry how that worked out.

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Friday, June 5, 2015 9:23 AM

I have been working in the IT industry, mostly as a software developer, for over twenty years now and never have I seen such a favorable market for people working in this industry. The company I work for can't hire good talent fast enough. There still aren't enough coming out of college to even try and groom them into the industry. My specialization is Info Sec, which, arguably, is the most needed right now, and there is an even larger shortage for them. I get five to ten calls a week from companies blind calling me begging me to come interview with them.

If you are laid off in this industry and cannot find work right away you are probably dead weight anyways and should consider a different career path.

Believe me, most companies don't want to have to outsource to Asia for this work. It's a pain, especially the entire VISA process. Communication is always an issue which means communicating requirements and getting what you asked for doesn't always work out. It is usually cheaper but the upfront costs can eat into those savings, especially if the person in question doesn't work out. The problem is there are more jobs than there are workers so they are forced to go this route.

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Friday, June 5, 2015 9:38 AM

This article specifically isn't about lack of American talent though, as far as I can tell. They HAD Americans who could do the jobs, then brought in H-1B's who couldn't, and paid the old people to train the new ones. By definition they didn't have a shortage of talent, else how could they train them? They basically just gave all their new employees 3 months of free on-the-job training.

Last edited by birdhombre, Friday, June 5, 2015 9:40 AM
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Friday, June 5, 2015 3:48 PM

Jeff said:

Do you really need unions for a profession where people are in demand and routinely make six figures? A union can't fix a market condition where talent supply is too high for jobs of moderate skill requirements. Ask the auto industry how that worked out.

Yes... yes you do. To prevent this exact scenario from happening. Would not have happened if the IT department was unionized, guaranteed. But I admit, I expected this sort of reaction because it's the almighty Mouse, and the almighty Mouse can do no wrong, even when going in dry on hard working, loyal employees. Unions provide job security, wage protection, and protection from being outsourced to the lowest cost foreign operators, which is exactly what happened here.

The fact that workers are in demand is exactly *WHY* they need protection. How can one expect to make a stable, secure living if every 5 years they are replaced by a lower cost, fresh out of school, starry eyed kid who "is just so happy to have a job that I'd do it for free?" Or a foreigner with a work visa? Can you raise a family knowing that your wage will be tied to that until you retire, and that you have to start over each time you get replaced because you were just starting to make too much money? I, for one, feel fortunate that my union is protecting my highly skilled, in demand, well paying job, and I gladly hand over my dues.

What if the engineering on your favorite B+M was outsourced to the No Limits gamers club? Would you feel better? What if during your heart surgery, they bused you down to Mexico because it costs the hospitals less? What if your auto repairs were outsourced to a 15 year old kid in his garage? What if your airline pilots were outsourced from Asiana Airlines? There are week unions and strong unions. These are the sort of things that strong unions prevent.

*steps off soapbox*

Last edited by Tommytheduck, Friday, June 5, 2015 3:48 PM
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Friday, June 5, 2015 4:43 PM

I don't think the reaction was because it was "The Mouse" - I think it speaks more to the public opinion of unions in the US at this point in time. Back a half-century ago, a third of our workforce was unionized, wages went up, and businesses remained profitable nonetheless.

Some unions did make missteps, but it's disheartening that the entire institution has gotten such a bad rep. I tend to think the media helped the public make that determination. And now, less than 10% of our workforce is unionized, wages stagnant at best, and every company around the globe is out looking for cheaper labor (and power) costs. It has truly created a race to the bottom - for everyone but shareholders.

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Friday, June 5, 2015 9:32 PM

Thank you for "getting it" Gator. You're spot on. Unions are demonized for every little thing by both the media, politicians, and the corporations. Hostess declared bankruptcy, stopped making Twinkies and blamed it on the Union, effectively giving everyone in Muhrca reason to hate them. Union busting issues to vote on in elections are called "Right To Work" issues, insinuating that keeping unions will take away your right to work.

Everyone is so quick to say they don't want them, but then complain about issues such as preferential promotions, unequal pay for women, glass ceilings, etc.

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Saturday, June 6, 2015 10:37 PM

Tommytheduck said:
Unions provide job security, wage protection, and protection from being outsourced to the lowest cost foreign operators, which is exactly what happened here.

You're completely wrong, which is why I brought up the auto industry. Sure, in the short term, unions put off the inevitable, but just because Detroit couldn't offshore its work didn't mean that consumers couldn't buy competing product from offshore. And that's why Detroit was practically destroyed in the process. If a dude can make $50k a year mounting a bumper, that's not sustainable. The salary doesn't match the skill.

Furthermore, IT isn't like other industries. People who spend years and years in the same place are rare. My record tenure at any one job is now 2.5 years. The skills required are constantly changing, and it's necessary to constantly learn and evolve. To Kick The Sky's point above, if you can't get work in software, you're doing it wrong. Every company I've worked at has had to recruit internationally, at great expense, just to have enough people to get the work done.

As I said before, the "server monkey" subcategory of work, which was a large portion of what Disney is outsourcing, is the one segment that isn't growing, or at the very least, doesn't demand the salaries it used to. No amount of protectionism is going to fix that. (And the hyperbole about it being Disney has nothing to do with it... people around here will be the first to tell you that they completely suck at IT in a greater sense.)

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Sunday, June 7, 2015 12:34 PM

Jeff said:
If a dude can make $50k a year mounting a bumper, that's not sustainable. The salary doesn't match the skill.

It's really not any more complicated than that.

My personal anecdote is growing up blue collar in western PA. All our parents were union working at steel mills. I couldn't even begin to tell you the number of times one of those guys told a story of being threatened for working too quickly or too hard or whatever. The logic was to always make sure there was work to do.

They were essentially artificially raising wages while at the same time lowering productivity - all in the name of 'job security'

If that makes any sense, you're a dumbass.

All those guys lost their jobs, ended up low income, the mills left town and we ended up with the Rust Belt.

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Sunday, June 7, 2015 8:15 PM

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Monday, June 8, 2015 8:08 PM

Jeff, I'll cede to you that the IT industry, which I know nothing about, and my experience, appear to be apples and oranges. IT apparently has thousands or more available companies looking for workers. There are only so many companies out there that I can work at that I would consider "career." I took my current job 1.5 years ago, and hope to retire here in another 20. But I stand behind unions no matter what. It's not perfect, no, plenty of bad examples out there. Auto industry? Absolutely. Gonch's post? Why not? though it's a dated reference, to be sure.

But to your point of working 2.5 years at a single job... Is that what you really want, or is it simply what you have to do to survive? (This is a serious question, not just me being difficult.) Do you really want to be changing jobs every 2-3 years, or is it just the nature of the industry? Is there nothing to be said for job stability? Can't you train on new skills as technology evolves and stay in one spot?

I wrote out a whole paragraph contrasting my industry and my union negotiated contract to the above situation. But in the end, it was mostly just me talking about myself, and I don't really like to do that. So I'll bow out...

Last edited by Tommytheduck, Monday, June 8, 2015 8:10 PM
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Monday, June 8, 2015 11:49 PM

Changing jobs is the result of a number of things:

  • Contract jobs have a finite life span. Businesses believe that software people are interchangeable. This is not actually true, and maybe some day they'll learn.
  • Contract jobs, by the way, pay crazy good money, and you can either swim in pools of cash or take a whole lot of time off in between.
  • The demand is so high that you don't have to stay in something that you don't like.
  • I can't speak for everyone else, but "stability" is a myth. After the first time I got laid-off back in 2001, I have not been content to leave my future in the hands of people who have no stake in my future.
  • You never stop training.

Unions make sense when they offer some kind of meaningful protection that the government does not provide (the contract around clean costumes for the Animal Kingdom Lion King show, for example), and that's about as far as I can see a need for them. History beyond that is ripe with examples of forced mediocrity, protecting the lazy or entitled, and putting companies under and their people out of work by inflating the market value of labor. You can't bend the market dynamics of supply and demand for labor without consequences. This is a hundred times more true as the economy has become more global.

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Tuesday, June 9, 2015 10:47 AM

Jeff, that seems to ignore the dynamic that has taken place among employers - consolidation has meant that fewer employers are in the market, and industries like insurance, telecom, and banking have more and more leverage in the marketplace.

When employees are "on their own" - that may work fine in a mom-and-pop situation where loyalty and experience come into play when negotiating salaries and raises/promotions. But the buyers of labor have immense clout at the bargaining table these days, and that's where "right to work" laws, as one of many examples, show that the imbalance of power takes a toll on employees, NOT shareholders.

When I was in B-school a century or so ago, shareholders were the recipients of "the remainder" - after costs and expenses. Now, costs (like labor) and expenses (like good raw materials) have to be shaved continuously in an effort to boost next quarter's earnings reports.

I'm not saying I see things 100% clearly without bias....I am saying that the "other side of the coin" sees NO merit in what I'm saying.

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Tuesday, June 9, 2015 11:31 AM

No, that's exactly the point I'm making. What you're calling "leverage" is the labor supply and demand issue. Just because we don't like it doesn't mean you can fix it by circumventing the market with protections. I'm far from a red state swinging guy, but people need to stop framing this as an issue of "power." There are a lot of broken things about the way the market works (and you're right, public companies are the worst part of "the system"), but protecting labor by allowing it to supersede demand or reducing efficiency does not work, it makes things worse.

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Tuesday, June 9, 2015 4:48 PM

Well isn't the point of unions to protect labor without allowing it to supersede demand or reduce efficiency?

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Tuesday, June 9, 2015 5:11 PM

That's a loaded question, and it doesn't have a yes or no answer. It is intended to protect labor, but in practice it often does so to the point of superseding demand and reducing efficiency. That's why people can make $50k mounting bumpers.

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Thursday, June 18, 2015 1:58 PM

Didn't I read that they reversed this decision?

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