EmblemHealth employees stage protest after company moves to outsource IT work

Dive Brief:

EmblemHealth issued layoff notices to 250 IT and operations employees Tuesday and will instead outsource its tech work to services firm Cognizant, according to a report from Modern Healthcare. The layoffs will take effect in 90 days.
As a result, on Wednesday about 25 of the company's IT workers staged a protest outside the insurer's offices in New York, shouting "Protect U.S. jobs" and "it's our jobs now, your jobs next," the ComputerWorld reported.
Even though workers had organized to try and stop the looming layoffs, CEO Karen Ignagni said outsourcing the work was part of "crucial" modernization for Emblem's future.

Dive Insight:

In a video of Ignagni's announcement, she said the "move to a modernized platform will no longer require the level of staffing we now have to maintain the old system." The company had "come to realize that building our own technology would require hundreds of millions of dollars and require time that we didn't have," she said.

Cognizant, one of the largest users of H-1B workers, will reportedly offer some jobs to employees, but there would be no guarantee of long-term work.

The debate over moving IT jobs offshore and companies using H-1B visas has grown increasingly heated over the last year. Last summer, Southern California Edison workers complained that more than 500 of them were laid off as the company brought in cheaper H-1B workers from other countries. Former Disney workers say the same thing happened to them when 250 employees were laid off in late 2014 and replaced by workers from an outsourcing company in India.

Many companies, though, are struggling to compete in the market and are trying to find ways to create savings. Last year, before its split into two companies and after it announced 30,000 job cuts, HP executives said that shifting part of its worforce overseas was necessary for its survival, helping it reduce and control operating costs.

Meanwhile, demand for H1-B visas is higher than ever. The agency that handles H1-B requests recently said it hit its cap of 85,000 petitions in just five days and will award visas using a lottery system.