Pfizer To Ax IT Contractors?

Pfizer Inc. has been training foreign workers in Groton and New London over the past few months in anticipation of transferring much of its information-technology work from local contractors to outside contracting firms, according to several sources.

The sources, all of whom live locally, insisted on not being identified because they didn't want to be fired or lose a chance for re-employment. Some were hoping to retain their jobs, and all were speaking with the expectation that, if the upcoming changes at Pfizer are publicized, the company might rethink its decision to drastically reduce its local contracting force.

The sources blame a policy the New York-based pharmaceutical giant enacted late last year for the changes at Pfizer. The changes will affect thousands of so-called “contingent workers” associated with the company throughout the United States, including Puerto Rico. Several hundred of these workers have been contracted professionals employed in information-technology functions on the Pfizer research-and-development campuses in Groton and New London, sources said.

The new policy, known internally as Procedure 117, will force many of these contractors, some of whom have been working at Pfizer's local campuses for a decade or more, to leave by the end of this year, sources said.

”It's a very, very stressful work environment. ... I haven't been able to sleep for weeks,” said one source.

”Morale on site is absolutely at the lowest of any time I've worked at the company,” said another source.

Read Procedure 117 memo

Pfizer said it would not comment on what it called speculation and gossip. It also would not comment on Procedure 117, saying it does not respond to questions about internal documents.

”These rumors are distracting and hurtful to our colleagues who are working together to deliver a pipeline of new medicines in areas of unmet medical need,” said Pfizer spokeswoman Liz Power.

Though companies are required to notify the government when they let go large numbers of workers, these layoffs are being done a few at a time, sources said, and therefore fall under the radar. What's more, these contingent workers are not directly Pfizer employees and are on mostly one-year contracts, so the notification requirements might not apply in any case, they said.

For the most part, contingent workers are not used in the core areas of research and development, Pfizer said; instead, they work in support areas, including janitorial, cafeteria and clerical jobs.

Presumably, the loss of contingent workers in these areas would simply mean the replacement of one local worker by another local worker, sources said.

But a large portion of contingent-worker jobs at Pfizer's local campuses, according to sources, are technical: managing computer systems, doing business analysis and writing software, for example. It is these jobs that will be outsourced, they said.

Many of these technical workers, soon to have their contracts expire, have become so interwoven with the fabric of Pfizer that they are hard to distinguish from company employees, sources said. And this is what apparently concerns Pfizer, they said, because these workers do not receive company benefits and might feel entitled to them down the road had the company not moved to distance itself from the contractors.

Pfizer said the company has between 800 and 1,000 contractors on site locally during any given day, along with about 5,400 employees.

More than half of information-technology workers in Groton and New London are contracted rather than being Pfizer employees, sources said. Pfizer would not give a number for its IT work force.

”Of the thousand-plus contractors ... to be released by end of year, most have only heard indirectly, via office whisperings, that they will not be renewed in 2009,” said one source.

According to Procedure 117, waivers of the policy will be granted only in extraordinary circumstances, when the company deems that a loss of business knowledge or other serious consequence would result.

Some sources once believed the number of U.S. contractors who might be converted to full-time Pfizer employees or retained in some other way would be kept to an absolute minimum. But recently, they said, Pfizer IT managers have started to question the loss of the local work force, and there are indications that more local workers will be able to extend their stay with the company, though it is unknown how that would be accomplished considering the structures of Procedure 117.

This trend toward retaining more local IT workers has been enhanced by the recent announcement, one source said, that individual business units will have more latitude to run their divisions independently. This reverses a previous trend of centralizing Pfizer technology functions, the source said.

At the same time that local contractors are facing the anxiety of possible job losses, sources said, Pfizer is ratcheting up the number of foreign workers, mostly from India, who are arriving at the company's global R&D headquarters on controversial H-1B visas.

These special visas were created to allow foreign workers to take jobs in the United States that could not be filled by Americans, but Pfizer - like other U.S. companies in the past - essentially has been using them to replace American workers, the sources said.

”We're training them,” said one source, who worries about being out of a job by the end of the year.

Pfizer will not reveal how many H-1B workers it retains locally, though one source put the number at anywhere between 50 and 100. But scores of other foreign workers have been cycling through the local campuses over the past several months in anticipation of moving much of Pfizer's information-technology functions overseas, the sources said, though recent developments indicate the company may be pulling back from some of these plans.

The Indian nationals here on H-1B visas are working on Pfizer projects at various local sites, sources said. Many of them are employed by Indian-based service providers such as Infosys Technologies and Satyam Computer Services and then leased to Pfizer at rates in many cases much lower than American contractors have been making, according to the sources.

”Pfizer has entered into the agreements because the bill rates are significantly lower, not because they cannot find workers locally,” said one source.

For instance, said the source, a local technical writer might earn a rate of $65 an hour (but pocket only $40 an hour, with the contracting firm getting the rest), while an employee of Infosys working locally on a Pfizer project might be paid $35 an hour (but pocket $20 to $25 an hour, with the Indian service provider earning the difference). An offshore technical writer would get even less, according to sources, perhaps $17 to $20 an hour.

These same Indian companies might be willing to employ the departing Americans but at much lower wages than they have been making, sources said.

”I'd have to take a 50 percent pay cut just to get in the door. Who's prepared to do that?” said one source.

At the same time, sources said, information-technology managers are concerned about the loss of institutional memory that will result from offshoring of computer functions, as well as the quality of foreign IT professionals compared to their American counterparts. Still, even managers aren't sure about the full extent of the changes ahead, sources said.

”It's so frustrating, because no one knows anything,” said a source. “I'm at my wit's end.”
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