28 April 2004 Embattled oil giant Royal Dutch/Shell is to cut up to 30% of its 9,300 IT jobs by 2006 and move many tasks offshore to countries such as Malaysia and India.
Shell, whose IT operations are concentrated in the UK, the US and the Netherlands, says the move to send IT jobs ‘offshore’ forms part of an initiative aimed at raising efficiency and cutting costs.
This wider project includes standardising platforms and consolidating applications.
Shell is under pressure from shareholders to sort out its finances in the wake of its shock announcement in January 2004 that it overestimated the scale of its proved reserves by 20%.
The scandal has already claimed a number of senior executives, and IT staff in the UK are likely to question whether they are its latest victims.
However, the world’s third-largest oil company said the IT cutbacks were unrelated to its recent accounting problems.
Indeed, Shell has merely become the latest organisation to send IT functions to lower-cost centres in Asia.
This is provoking anger among IT workers on both sides of the Atlantic. Earlier this week, a group of past and present IBM employees staged a protest outside the IT giant’s annual meeting in Rhode Island, calling for the head of CEO Sam Palmisano. Among the slogans they shouted as shareholders arrived for the gathering were “Offshore the CEO!” and “America’s future is not offshore!”
IBM has transferred a large number of IT jobs from the US to India, a decision that Palmisano was forced to defend at the meeting.
Palmisano said IBM was a truly global organisation and needed to “look at a global skill pool around the world.”
Other proponents of offshore outsourcing say that it creates more IT jobs in the West than it eliminates.
The Information Technology Association of America, which represents more than 300 technology suppliers, estimates that around 104,000 IT jobs in the US were sent offshore in 2003, but 190,000 new jobs were created by “the incremental economic activity that follows offshore IT outsourcing”.