Exclusive: IBM Moves Hertz' IT Support To India

Two years after winning a contract to provide IT services to Hertz, IBM has moved much of that work from the debt-laden car rental giant's technology center in Oklahoma City to India.

About 50 former IBM employees who worked on the Hertz contract in Oklahoma are now seeking assistance under the federal government's Trade Adjustment Assistance program, according to documents obtained by InformationWeek.

"All production support/technical support for IBM on the Hertz account has been moved to India," states an application for TAA assistance filed with the Department of Labor on behalf of IBM's Hertz contract workers on Nov. 12, 2010. The application specifies the total number of workers affected as 50.

It identifies IBM service delivery manager Kelly Thomas and production services manager Sandra Robinson as verification contacts.

If the application is successful, the workers will be eligible for a range of benefits—including subsidized retraining, income supplements, and healthcare tax credits. The TAA program was originally designed to help manufacturing workers whose jobs had been shipped overseas, and was recently extended to include software developers and other IT professionals.

A spokesman for Hertz said he was unable to say exactly when the jobs were moved. "Fifty sounds more to us like what's happened over the two years plus that this agreement has been in effect," said the spokesman. An IBM spokesman declined to comment.

IBM inked a deal to provide Hertz with a range of IT services in May of 2008. Among the services covered by the agreement are development and maintenance of Hertz' business applications, mid-range hardware and software support, and help desk services.

At the time, IBM said it would support Hertz "through its global delivery centers and will operate in Hertz Technology Centers in Oklahoma City." It was not immediately clear if IBM continues to carry out some IT support functions for Hertz in Oklahoma.

Moving tech work to India through its prime IT contractor could help Hertz put a dent in its massive debt load, which stood at more than $12 billion as of September, 2010, according to SEC filings. Tech workers in India typically earn anywhere from 10% to 50% less than their U.S.-based counterparts.

Outsourcing advocates also argue that the practice, which has been adopted to some extent by almost every major Fortune 500 company, allows businesses to quickly ramp up or reduce labor resources, depending on economic conditions or business cycles. So-called offshoring, however, has become increasingly controversial as the U.S. struggles through a jobless recovery.