USF&G; Corp. has signed a $10 million contract to hand over some of its internal computing work to a minority-owned Maryland computer firm.
As part of the four-year agreement, 130 information-systems employees at USF&G; are being offered full-time jobs with the contractor, Rockville-based Maxima Corp.
After four years of layoffs, many of them hitting information systems, the Baltimore-based insurer said it wants to make this staff reduction as painless as possible.
Those who take the offer are being guaranteed a comparable salary structure and a minimum of 90 days' work at Maxima, as well as four weeks of pay in cash, plus severance of two weeks' salary for each year of employment, according to Thomas K. Lewis Jr., senior vice president and chief information officer at USF&G.;
"My sense here was that there needs to be a great healing process at USF&G; and we needed to put something in place that demonstrated a sense of compassion," Mr. Lewis said. The company didn't want to "appear heartless either in outsourcing or just laying people off in dribs and drabs over the next four years."
If more than 50 or so people take the offer with Maxima, layoffs most likely won't be needed, Mr. Lewis said, noting that 45 already have accepted. The rest of the 130 either can compete for new jobs with different skills at the company, or make use of outplacement services.
From its peak of 12,500 employees four years ago, USF&G; had dropped to 6,665 at the beginning of this month.
Those job cuts were part of a major restructuring that brought the company from a loss of $569 million in 1990 to a gain of $170 million in the first nine months this year (including $74 million in one-time tax and accounting benefits).
The current offer is part of a planned change from USF&G;'s mainframe computer system to a "client-server" system.
Client-server systems typically connect many personal computers together in a telephone-based network, with several larger computers "serving" those PCs a variety of specialized tasks. With mainframes, almost all of the computing muscle resides in one large computer.
But while the transition occurs, USF&G; will need to maintain increasingly smaller parts of its existing system. "In the next four years there will be a serious reduction in the amount of mainframe skills USF&G; will need," Mr. Lewis said.
"What we don't want to do is do this like the Chinese water torture: every few months announce a new [severance] program."
That's where Maxima comes in. This summer USF&G; put out a request for proposals for a contractor to wind down some of the insurer's mainframe computer operations during the next four years. Among the criteria were the contractor's ability to assimilate USF&G; staffers, without having to relocate them out of the area.
IBM Corp., which doesn't have enough job opportunities in this area, won the bidding by agreeing to subcontract with Maxima, which does. Further, IBM agreed to guarantee Maxima's performance, Mr. Lewis said.
Maxima officials could not be reached for comment.
While roughly half of the 130 eligible employees are needed for the contract, USF&G; agreed to pay Maxima to take on the extra workers if the full complement signs up. Only 90 days of work are guaranteed, but the USF&G; contract calls for at least one year of work for many of those people, and up to four years for some.