Jackson National Life Insurance Company Publicly Admits That Outsourcing Is Morally Wrong

October 29th, 2006 | by christine |

Jackson National Life Insurance Company Publicly Admits That Outsourcing Is Morally Wrong

Ok, maybe they haven’t said it out loud, but they sure are acting like they’ve been accused of something dirty.

According to this AP article, JNL has asked Senator Stabenow to retract her statement about JNL outsourcing, and to apologize “for falsely denigrating the excellent organization they have worked to create.”

The Stabenow campaign has said the outsourcing comment refers to a 2001 software contract between Jackson National and a contractor that has done some of its own work overseas. Jackson National says it performs most of its information technology work itself.

I find it interesting that the JNL spokesman uses the word “denigrating” in his demand for an apology. Is JNL admitting that outsourcing is morally wrong? Something must be terribly bad about outsourcing, if accusing a company of doing it is “denigrating”.

Why isn’t JNL defending its decision to hire that vendor? Why aren’t the JNL managers bragging about how much money they saved the company?

To be fair, JNL does do alot of work in-house, and it wasn’t JNL that called India to find a programmer. But JNL did hire a company that outsources. Presumably, JNL shopped around for the best priced vendor, and chose the least expensive. Someone came along and said “we can do it cheaper, better, and faster”, and JNL said “you’re hired.” They either didn’t have enough sense to look into the vendor’s business practices, or they didn’t care. The vendor had the right to go offshore, and JNL had the right to hire that vendor. The people of Michigan have the right to talk about it and evaluate JNL … and JNL executives … according to these business decisions.

If JNL is offended by this, perhaps the company will become a leader in its industry, in terms of opposing the outsourcing of work that can be done by Michigan labor.

On a related note, check out this excellent article on JNL’s advisory board, and Mike Bouchard’s immediate transition from legislator who makes insurance law to highly paid director of JNL.

Update: related post here.

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  1. 4 Responses to “Jackson National Life Insurance Company Publicly Admits That Outsourcing Is Morally Wrong”

  2. By Joel on Nov 1, 2006 | Reply

    “But JNL did hire a company that outsources. Presumably, JNL shopped around for the best priced vendor, and chose the least expensive. Someone came along and said “we can do it cheaper, better, and faster”, and JNL said “you’re hired.” They either didn’t have enough sense to look into the vendor’s business practices, or they didn’t care.”

    Your “presumably” is false. Jackson contracted with Cybertek and Vantage, two US owned software companies, long before they were acquired by CSC, a foreign company. CSC then made the decision to send some of their programming jobs to India and China. But this all happened well after Jackson had already entered a contractual agreement with Vantage and Cybertek. By the way, a few other organizations have contracts with CSC as well: namely, the U.S. Departments of Commerce, Education, Energy, Health and Human Services, Homeland Security, HUD, State, Justice, Transportation, Treasury, NASA, FEMA, the General Services Administration, the USPS, and every branch of the military.

    Jackson responded quickly to Stabenow’s claims because she was making a false accusation that had the potential to harm their business. Senator Stabenow’s people should do a little more homework before they accuse companies IN HER OWN HOME TOWN of something that they are not guilty of.

    “The vendor had the right to go offshore, and JNL had the right to hire that vendor. The people of Michigan have the right to talk about it and evaluate JNL … and JNL executives … according to these business decisions.”

    And similarly, the people of Michigan have a right to know when their elected officials are fabricating lies about Michigan businesses before they go to the ballot boxes.

    Jackson also has a branch office in Denver, CO. If this is the type of treatment they should expect to receive from MI Senators, maybe they should consider relocating their entire business there (along with their 1300 Michigan jobs). I’m sure that would sit really well with Ms. Stabenow’s constituents.

    Joel Smith
    Jackson Employee

  3. By christine on Nov 1, 2006 | Reply

    Hi Joel,

    Thanks for the comment and welcome to my site.

    First I will say that I have noticed over the past 5-7 years that JNL seems to be committed to doing alot of in-house IT stuff. (Some of my former students were excited about the possibilities of working there.) I have always appreciated JNL for that, because IT is so easy to outsource.

    Now, to your comment, the first point I would make is that if a party to the contract changes, then the contract itself might be in question. The details of the contract are none of my business, and I’m not a lawyer so I wouldn’t understand it that well anyway. But I ask, did JNL question their contractual obligation when they found out that work was being sent out of the country? Did they do anything at all when they found out about that? Did they try to reclaim that work for American labor?

    I can’t imagine a US court not letting JNL out of that contract, once the work went offshore. But as I said, I’m no lawyer. I have no experience in that kind of thing.

    I do recognize that JNL was not obligated to try to bring that work back to the US. But this reminds me of Dick DeVos saying that he had to build a factory in China because that’s what their law required. So Dick “succeeded” in China by allowing China to keep Michigan goods out. He had the right to do it, but let’s call it what it is: turning away American labor, because it is easiest to do so at that moment.

    Let me be clear about that: I’m not trying to say that JNL is like Amway, or that those situations are the same. I just mean that although there may be a good reason why work created by your Michigan based business was done offshore, that doesn’t change the fact that it was done offshore.

    I’m sorry for any ill effect that this may have had on JNL. No business should be harmed in a political campaign. Assuming that your explanation is accurate, If I were the candidate, I probably would not have chosen to call it ‘outsourcing’ and make it a campaign issue. It is a bit of a stretch, though I still think the Senator’s point has some validity. Senators Levin and Stabenow are working hard to keep our jobs here. If Stabenow’s opponent is affiliated with a company doing work offshore, then it’s a legitimate point to make.

    A second point that I would make is that your company hired a former legislator. During his tenure as a legislator, JNL had, at best, the benefit of a relationship with a legislator while he was serving in public office. At worst, JNL had the benefit of state legislation being influenced by a guy who happens to be friendly to your industry. After Bouchard’s time in the legislature, JNL then had the benefit of hiring him as a director getting a board member who was familiar with the legislative process, who had friends in the government, and who may soon be a US Senator. So, you have to take the bad (campaign stuff) with the good (political friendships that influence industry regulations).

    Your company certainly pays him quite a bit of money for his “expertise” in a task that isn’t on his resume.

    Surely the company must’ve seen something like this coming. JNL is not run by stupid people. (presumably again, but I’m probably right this time ;) ) They must have known that Bouchard and his relationships would be scrutinized. He’s been toying with this candidacy for a long time.

    Perhaps JNL should move to CO. I hope not, but I can’t speak to that. I hope that Colorado’s Senators stand up for American labor as well as Senator Stabenow does.

    I do appreciate that you took the time to comment. I’m glad that you did. Anyone with any opinion is welcome to comment here. And I’ll highlight your comment to give it more visibility.

  4. By Kathy on Nov 1, 2006 | Reply

    Christine,

    I can’t speak about JNL’s contract, but I can tell you what happened to the transcription company I work for when the company changed hands. All of the vendors requested a meeting to discuss any changes in the way the company planned on doing business and we lost several hospitals when they discovered work would be sent overseas. If regional hospitals in Michigan had the business acumen to ask this pertinent question, I would hope that JNL would have done the same.

    My final comment is directed to Mr. Smith. I don’t know if you’re a spokesman for JNL or not, but your veiled threat to relocate 1300 jobs to Colorado because of one politician doesn’t do much to help your corporate image. How does bullying fit in with the “excellent organization” JNL claims they worked to create? I hope that’s not the kind of customer service your clients can expect.

  5. By Joel on Nov 2, 2006 | Reply

    A quick response…

    First of all, I’m an actuarial analyst at Jackson, and I have worked here for just a bit over two years. So I have very little inside information, outside of what has been told me by our CEO in a letter he wrote to Senator Stabenow, which he then copied to all employees. I am most certainly not a spokesman for JNL, just a spokesman for me.

    Second, in his letter, he NEVER mentioned moving the business to Denver. That was just my own musings. It just seems to me that Michigan legislators should consider that this type of thing COULD happen when they do or say things that harm businesses in their constituencies.

    Thirdly, about CSC’s choice to outsource jobs; it would be EXTREMELY financially and logistically infeasible for Jackson to convert all their policy information to a new admin system without a really good reason. They have gone through a lengthy conversion from an old admin system TO Cybertek over the past several years. When you have as many policies as Jackson does, it’s no walk in the park. I don’t know if terminating the contract with Cybertek and Vantage would have been legally possible after their acquisition by CSC, but I do know that it would not have been in Jackson’s financial best interest to do so. Keep in mind, Cybertek and Vantage were not companies that operated out of Michigan. So even if CSC did outsource, it still didn’t involve outsourcing Michigan jobs, as Senator Stabenow has claimed.

    I hope this clears up some questions.

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