Union Aims to Disrupt Shell Outsourcing Plans

By Lawrence Walsh  |  Posted 2008-01-08 Print this article Print

Labor representatives for Shell Oil employees want affected IT workers to receive nearly $400,000 compensation packages for having their jobs eliminated.

Labor union opposition could delay Royal Dutch Shell's plans to outsource more than 3,000 IT jobs this year, according to published reports. (See Baseline's report "Shell Plots Massive IT Outsourcing Deal".)

Silicon.com and ZDNetUK are reporting that Amicus, a large U.K.-based manufacturing union, is raising red flags to the outsourcing plans because of previous changes in employee compensation plans.

Under revisions enacted last summer, Shell employees who lose their jobs because their positions were rendered redundant by other means would receive a package worth 50,000 British pounds (roughly $100,000). Previous to the change, workers were entitled to 200,000 pounds ($400,000).

Quoted union representatives say Shell no longer is committed to its employees and should ensure that they are properly compensated if they lose their jobs.

Shell, the world's third-largest company and second-largest oil company with revenues of $318 billion, declined comment on the report.

As earlier reported, Shell began studying restructuring options in 2005 to simplify operations and create greater operational efficiencies. Shell is the world's third largest company with more than 108,000 employees in 130 countries. The review of its IT infrastructure and operations began in 2006, as the company shift its operations strategy to greater reliance on "shared service centers," or regional hubs that support everything from business, human resource and IT operations for multiple countries.

Outsourcing is already a large part of Shell's IT operation, with contractors holding more than 40 percent of its 3,600 IT workforce. The company started studying broader outsourcing last year, and announced in December its intentions to contract much of its IT operations.

The Anglo-Dutch oil company announced plans to outsource nearly 3,200 IT jobs around the world as part of a corporate wide cost-cutting reorganization. In a previous interview, Shell told Baseline that outsourcing IT and reorganizing other measures would save it more than $500 million annually in operating costs.

While Shell is mum on specifics about its outsourcing plans, leading technology service providers EDS, AT&T and Deutche Telekom are reportedly the leading contenders for the contract. When the deal is struck, Shell will retain approximately 400 in-house IT workers.

Lawrence Walsh Lawrence Walsh is editor of Baseline magazine, overseeing print and online editorial content and the strategic direction of the publication. He is also a regular columnist for Ziff Davis Enterprise's Channel Insider. Mr. Walsh is well versed in IT technology and issues, and he is an expert in IT security technologies and policies, managed services, business intelligence software and IT reseller channels. An award-winning journalist, Mr. Walsh has served as editor of CMP Technology's VARBusiness and GovernmentVAR magazines, and TechTarget's Information Security magazine. He has written hundreds of articles, analyses and commentaries on the development of reseller businesses, the IT marketplace and managed services, as well as information security policy, strategy and technology. Prior to his magazine career, Mr. Walsh was a newspaper editor and reporter, having held editorial positions at the Boston Globe, MetroWest Daily News, Brockton Enterprise and Community Newspaper Company.

Submit a Comment

Loading Comments...
eWeek eWeek

Have the latest technology news and resources emailed to you everyday.