UC San Francisco Outsourcing IT Ops to India

• By Dian Schaffhauser
• 09/09/16

IT people are sounding sick from the announcement that the University of California San Francisco intends to outsource many of its technology functions to an India-based service provider. Reporting by Computerworld found that layoffs for some 17 percent of the institution's 565-employee IT staff will hit next February — after those same workers have trained Indian replacements employed by HCL Technologies.

The university is focused entirely on health areas, with four schools: dentistry, nursing, medicine and pharmacy. According to UCSF's website, there are currently 3,114 students enrolled in degree programs, 1,479 residents and 1,127 post-doctoral scholars. However, that small student body belies the size of the overall institution, which is currently the second largest employer in the city. UCSF's paid workforce comprises 22,000 staff and nearly 2,800 faculty.

According to Computerworld reporter Patrick Thibodeau, the contract recently signed with HCL will add up to $50 million over five years. The university estimates that the outsourcing will save about $30 million over that same period. If those numbers are accurate, the savings will equate to about one-tenth of a percent annually for the $5.5 billion enterprise.

The work being taken over by HCL primarily includes what some might consider "commodity" services: data center and network operations, as well as unified communications and application maintenance for PeopleSoft, C#, .NET and Java. University representatives told Thibodeau that the service provider would also deliver "application development augmentation services."

The individuals affected include 49 IT permanent employees, 12 contract employees and 18 vendor contractors, the article stated. Also, the university will stop attempting to fill 18 vacant IT jobs.

Joe Bengfort, CIO for the San Francisco campus, told Thibodeau in an interview that the university was facing "difficult circumstances" due to declining reimbursements and the impact of the Affordable Healthcare Act, which, according to Bengfort, limits reimbursements to about 55 cents on the dollar. On top of that, the shift to electronic medical records, he said, has put IT in the position of being responsible for twice as much of the operating expenses — 6 percent vs. 3 percent. Those expenses include more spending on IT security and analytics, even as the investment has "improved efficiency."

What isn't being outsourced, Bengfort stated, were IT functions "that require direct knowledge of UCSF and its mission." Those include jobs requiring skills in developing new programs for analytics and high-performance computing. Likewise, those jobs with a "direct and consistent interaction with end users" will remain with university employees; that includes the help desk.

Computerworld noted that the university already has other outsourcing agreements in place. Those include the relocation of "some IT equipment" to a Dell data center in Washington state and a contract with FireEye for security-related services.

What especially troubles some IT employees at UCSF, according to the article, is that this agreement could serve as a "pilot" for the overall university system. Bengfort emphasized that it wasn't the case. However, Thibodeau pointed out that the contract signed by UCSF could be "leveraged" by any of the nine other universities in the system.

Response on social media was anything but favorable. "Oh, great," tweeted one microbiology graduate student at UC Davis. "@UCSF is spending $50M to outsource IT work to India. Because everyone is so happy with UC management."

The news comes at a time for the university system when administrative oversight is under scrutiny. Recently, the chancellor for UC Davis, Linda Katehi, resigned following allegations of conflict-of-interest rules related to the employment of family members and showing what some considered to be poor judgment in response to on-campus student protests. Earlier this year, system President Janet Napolitano made headlines over feuds with Governor Jerry Brown on state-related funding issues, specifically related to the campuses in Los Angeles and Berkeley. The San Francisco institution receives $186 million — 3 percent of its budget — from state appropriations.