Moving IT to Low-Cost Countries

 

Pfizer circulated an internal memo in 2005 saying it would try to cut $4 billion from its annual operating costs by 2008, largely by moving IT and other operations from the United States and Europe to countries with lower costs of living.

The memo, titled "Evaluating Options: Moving IT Services to Low Cost Locations," outlined a plan to shift much of the company's IT operations to Indian IT services firms Infosys and Satyam.

It's not illegal for companies to bring in H-1B workers for training, even if they're there to learn how to replace U.S. workers, according to Ron Hira, assistant professor of public policy at Rochester Institute of Technology and co-author of "Outsourcing America."

"It's not surprising to have a company bring in [workers on] H-1B or L-1 visas to transition that work to companies like Infosys and Satya, which are classified as H-1B dependent because more than 15 percent of their work forces here are on visas," Hira said. "Still, you shouldn't have to dig your own grave by bringing in someone on an H-1B and training them to do your job."

Pfizer has between 800 and 1,000 contractors working in Groton and New London on any given day, alongside about 4,500 full-time workers, according to The Day.

The IT outsourcing contract is only one part of Pfizer's overall outsourcing and reorganization plan, which includes offshoring much of its manufacturing and raw-material production and acquisition. It cut more than 11,000 jobs last year and closed a number of factories in an attempt to save $2 billion in operating costs, according to Bloomberg News.

Much of the reconsolidation was sparked by the approaching end of the patent and exclusive-manufacturing rights to anti-cholesterol drug Lipitor and negative publicity about the effects of its anti-smoking drug Chantix. The two are among the company's most profitable products.

Pfizer, the world's largest drug maker, announced in October that its third-quarter net income rose to $2.28 billion, compared with $761 million in 2007, when it took a $2.8 billion charge for the failed development of an inhalant version of insulin. The company said cost-cutting played a major role in improving its net income during the quarter.