Best Buy age discrimination suit a reminder of outsourcing sensitivities

Australian Computer Society Philip Argy believes Australian companies are fair in dealing with older employees, but US company Best Buy's recent settlement of an age discrimination suit keeps the issue alive in CIOs' minds.

Age discrimination, or at least aging, remains a hot topic in IT circles: as the pioneers of IT retire, industry experts are sounding the alarm bell on a looming shortage of so-called legacy skills.

The study of aging IT workers has become something of a cottage industry. Strategies for dealing with potential culture wars between seasoned IT workers and a generation raised on the Web are now standard fare at IT conferences, and CIOs of all types face an imperative to find the right balance between workforce demographics and technical strategy.

This issue came to a boil in 2004, when US high-tech retailing giant Best Buy was hit with a class action age discrimination lawsuit brought by 44 former IT employees in 2004. Best Buy said the claim had no merit and vowed to vigorously defend the action.

The suit alleged that Best Buy unlawfully terminated the employment of the 44 plaintiffs and other IT workers in 2003 and 2004 based on their ages, according to published reports at the time of the filing. The plaintiffs ranged in age from 40 to 71, with an average age of 51 when they were terminated, a press release from Gray Plant Mooty, the Minneapolis law firm that represented the plaintiffs, stated. About 68% of the laid-off workers were age 40 or older. Their terminations were part of Best Buy's decision to outsource most of its IT work to Accenture, the suit alleged.

In June, an undisclosed settlement was approved in the U.S. District Court in Minnesota. Yet while that case will raise alarm bells for any CIO concerned about the implications of an outsourcing decision, Philip Argy, president of the Australian Computer Society (ACS) , says Australian companies have generally been quite positive when it comes to hiring older employees.

"We can't say age discrimination doesn't exist in Australia, but if it does, it's diminishing as people become more pragmatic over time," he explained. The ACS counts more than 17,000 IT professionals nationwide amongst its membership, and the organisation's most recent employment survey found around 20 percent of respondents said they had been discriminated against on the basis of age.

The circumstances of such cases obviously vary considerably, but the lack of Best Buy-styled class actions means there is little firm indication of just how Australian IT employers compare to their US counterparts. So while potential age discrimination exposure is something every employer needs to think about, Argy said the overall feeling he gets from members is that the Australian market still values its more experienced members.

"It's not just companies saying 'we'll compromise our needs to get the skill set we need'," said Argy, in reference to the need to keep aged employees onboard to ensure old systems can be maintained. "I think there's generally an increasing appreciation of the value of wisdom and experience. Particularly in areas like project management, the ability to say that I've been there and done that, and work out a solution because I've seen it before, has a lot of a value - and that's coming through."

Still, says one expert, as baby boomers edge toward retirement and companies look to outsource IT functions to save money or fill a skills gap, the industry may well see more such suits.

Bruce Barnes, president of Bold Vision LLC, a peer-to-peer counselling firm for CIOs, said age discrimination suits are not new in IT. "They've been happening, or at least attempted, for several years. When a big company like Best Buy settles, it brings the topic to the fore, " Barnes said. "Now, do I think it opens the door for more of it? Yes it does."

The decision to outsource is not easy, he said, and has been plagued by "shortsightedness forever."

"What suits like this point out to me is that if you are thinking of repopulating or reskilling or outsourcing your workforce, there are many dimensions that need to be discussed. If you don't, if you make a snap decision in a complex situation and get slapped with a lawsuit, frankly, you deserve it. Maybe if Best Buy had thought a little more carefully, they could have avoided this," he said.

Phil Murphy, a principal analyst at Forrester Research, said age discrimination suits may have other consequences. "I think we'll see an increase in these suits and, oddly enough, an increase in demand for older workers."

Murphy, who writes about IT roles and skills, said he believes the baby-boomer retirement will drive a legacy skill shortage. But the big loss will not be technical skills, which can be taught, he said, but knowledge of how business is done.

One "extreme example," he said, was a client company that had experienced high turnover in the executive ranks, but not in IT. "The IT folks were the ones with the business knowledge, and I'm not just talking about historical memory. These are people who were in the code, who know that when a customer does such and such, the company should do this," he said.

The knee-jerk approach to filling the IT skills deficit will be to hand over the IT functions and a portion of the in-house staff to an outsourcing firm, Murphy said, as Best Buy did to Accenture.

Under that scenario, older workers almost certainly will be passed over in favour of cheaper, more malleable younger employees. "So in that case, I can see an increase in lawsuits," he said.

Some businesses will decide to ship work offshore, to "make it someone else's problem," Murphy said. But offshore providers are already struggling to pay more highly skilled workers, creating demand for those very same baby boomers.

"It's not out of the realm of possibility that you could be suing your employers for firing you and walking into a better situation with a raise," Murphy said.

In any case, the debate over this shift in demographics -- confined to the 'Chicken Littles' as recently as 2004, when Best Buy was sued -- now covers issues that go well beyond legacy skills, Murphy said.

"I think we have come to the point where the retirement of the baby boomers ceases to be a Chicken Little topic and becomes a significant business problem, which also happens to affect IT."

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