Report: PG&E Offshoring IT Jobs to India to Cut Wage Costs

PG&E empty chair (Tony Avelar / Associated Press))
Tony Avelar / Associated Press

In the latest high visibility offshoring of Silicon Valley jobs to India, the San Francisco Business Times (SFBT) reported last month that the Pacific Gas and Electric Co. (PG&E) will offshore about 72 information technology (IT) jobs from San Francisco to India in a restructuring that could slash labor costs by 75 percent.

PG&E previously announced a restructuring plan to terminate approximately 390 full-time support services jobs and 800 non-employee contractors, while leaving 500 open position emptys. But SFBT sources revealed that laid-off San Francisco IT workers were offered 15-day temporary contracts through February 10 to train H-1B Visa holders from India-based Tata Consultancy Services on how to perform their jobs offshore.

When PG&E was contacted by the SFBT about offshoring jobs to Mumbai, India, company spokesman Brian Hertzog stated: “The focus is really on doing the right thing for our customers and the right thing for the business over the long term. That’s what this is about, and it’s what drove the decision.”

Hertzog added that the replacements are currently in the U.S. on H-1B work visas to learn the IT jobs, phase out older applications, and then transfer the tasks to workers in India. Although Hertzog stated that the roles of the terminated employees would have been phased out anyway, he acknowledged that PG&E’s IT group would contract for 100 H-1B Visa holders to do work the company calls more strategically focused and of higher value.

Tech wages are high in Silicon Valley due to the cost of living. According to the Numbeo website, the cost of consumer prices, including rent, in San Francisco are 322 percent higher than in Mumbai, India.

Paul Almeida, president of the AFL-CIO’s Department for Professional Employees, told the SFBT: “It’s knowledge transfer.” He complained, “They’re just transferring the knowledge of the business to these foreign countries through these outsourcing firms.”

Breitbart News reported that Southern California Edison (SCE) made a similar move in 2015 by outsourcing 500 American jobs and replacing them with presumably cheaper contractors, using H-1B visa holders imported from India. Many of the former SCE employees complained it was a demoralizing betrayal to be hired back as temporary contractors — in what the company called a transition effort — to train their replacements from India on how to do their jobs.

Breitbart News also reported  thatthe University of California announced in September 2016 that its San Francisco campus would dump 17 percent of its IT employees by February 2017 and replace them with contract H-1B visa holders from India. The cuts were aimed at eliminating 67 permanent UC employee positions — complete with generous pensions — as well as 20 American contract workers.

Although the five-year H-1B Visa program is supposedly subject to a national cap of 65,000 non-immigrant aliens per year, work at universities and non-profit research facilities is exempt from all H1B caps. The website reported that institutions of higher education applied for 16,112 cap-exempt H-1B Visas in fiscal 2015.

U.S. salaries for software engineers, after four years of leading the nation, only rose by only 2 percent last year, to $97,930. Silicon Valley IT wages are generally believed to be about 25 percent higher than the national average.


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