NiSource inks $1

		NiSource inks $1.6-bil outsourcing deal with IBM

		POWER - 7/07/2005
		NiSource inked a $1.6-bil deal with IBM to provide a broad range of transformation and outsourcing services aimed at delivering up to $530 million in operating and capital cost savings across NiSource's 15 subsidiaries, including Northern Indiana Public Service. The NiSource/IBM arrangement could be a prelude of things to come in the U.S. electric utility industry, according to IBM spokesman Ian Colley. In an interview, he said other unidentified utilities have approached IBM about performing similar outsourcing services. "It's a broad industry where we're seeing a lot of interest in this service," he said. The Edison Electric Institute does not specifically track utility outsourcing, according to an EEI spokesman. But he added, "Companies will take a look at it if the numbers [for savings] are there." The NiSource/IBM accord, effective July 1, is expected to lead to the reduction of more than 1,000 NiSource workers - 572 will become employees of IBM or its subcontractors while another 445 positions will be eliminated by NiSource by Dec 31, 2006. NiSource currently has about 8,500 employees. A breakdown of jobs to be affected at the subsidiary is not yet available. IBM will operate several business functions for NiSource, including human resources, finance and accounting, procurement, customer contact, meter-to-cash and information technology. NiSource and IBM signed the accord barely a month after it initially was unveiled. Since then, the plan has drawn opposition from various labor and local governments in areas where NiSource operates, including northern Indiana. NIPSCO, the state's second-largest electric utility, would need approval from the Indiana Utility Regulatory Commission to outsource the jobs of any of its approximately 2,400 employees. A NiSource spokeswoman said her Merrillville, Ind.-based company "wants to make sure there's a smooth transition" in carrying out the plan. The company also wants to make it as painless as possible for employees whose jobs are eliminated. That may be minor solace, though, to members of United Steelworkers Local 13796, which represents several hundred NIPSCO clerical workers. "Some cuts are already being made," said Karen Bryan, who heads up the local's grievance committee, but "none of the bargaining unit positions are being eliminated" when the NiSource/IBM pact was signed. Bryan said her union has a no-layoff clause in its contract with NIPSCO for workers with at least five years' seniority and is not certain how NiSource intends to proceed with job cuts or transfers.