Report: Verizon signs $700M outsourcing deal with Infosys

Dive Brief:

Verizon is sending 2,500 employees from the U.S. and abroad to work for Infosys, which is part of a $700 million deal with the outsourcing firm, according to a Wall Street Journal report Wednesday.
The agreement is part of a companywide effort to reduce costs by $10 billion, according to the report. Verizon is also offering severance packages to about 44,000 members of management, excluding employees in sales or "crucial" company roles, Bloomberg reports. Taken together, the severance package and the outsourcing agreement would impact up to 30% of Verizon's 153,100-employee workforce, according to the Journal.
The voluntary packages would give employees three weeks of pay for every year worked at the company, maxing out at 60 weeks, according to the Journal. But the severance offer excludes employees under the outsourcing agreement. If Infosys job offers are declined, those Verizon employees will not receive a 2018 bonus.

Dive Insight:

Verizon's deal is an outlier in the industry as outsourcing technology services have become less popular. U.S. government calls to "Buy American, Hire American" have also had an impact on how companies acquire talent, especially for hard-to-fill high tech jobs.

As the enterprise has turned toward adopting "as a Service" computing models, outsourcing IT staffs has become less en vogue. "The focus has shifted from traditional work transfer to upfront transformation and automation," according to Doug Plotkin, managing director of Deloitte Consulting LLP, in a 2018 Deloitte outsourcing report.

Companies are buying tools instead of investing resourcing to build them internally, making it easier to implement technology more quickly at scale.

Many organizations expect to cut costs by outsourcing, but many of those savings are reinvested into the business for further innovation, according to Deloitte. Now, outsourcing can be as simple as adopting a robotic process automation solution to streamline repetitive tasks or adopting the cloud.

"As a service" and automation service adoption is a far cry from the outsourcing reported in recent years. In 2016, EmblemHealth issued layoff notices to 250 IT and operations employees and outsourced its tech work to Cognizant. The move sparked widespread criticism and employee protests.

But deals like EmblemHealth's no longer dominate headlines. The value of global outsourcing deals has fallen and more work remains onshore rather than moving abroad.