DETROIT – In March, with Detroit feeling the acute pain of the Great Recession even worse than many cities, Blue Cross Blue Shield of Michigan tried a novel approach to staffing it hoped would help.
Having been tasked with finding ways to cut costs, the insurer was nonetheless wary about pursuing some of the options that might have realized the most savings.
"We have a fairly large IT organization, and we employ hundreds of leased employees and contractors to cover IT initiatives on an annual basis," said Gary Harvey, vice president of systems development at Blue Cross Blue Shield Michigan. "We determined that it was a fairly good cost-savings opportunity for us to go to India or another country."
Moving offshore could have saved as much as $15 million per year. But, as the company's president and CEO Dan Loepp told the Detroit Free Press, with the company having already recently announced 1,000 layoffs, "my stomach couldn't handle that. I said there's got to be a way to cut costs and still keep jobs in Michigan."
"We realized that it really was in conflict with our mission as a company," said Harvey. "As the largest not-for-profit insurance company in the state, our mission is really to help grow the economy and jobs in the state of Michigan."
Enter Cindy Pasky, founder and CEO of Detroit-based Strategic Staffing Solutions (S3), an IT consulting and staff augmentation firm. Pasky had an idea.
Instead of moving offshore, she suggested, why not establish a committed IT development center, right in downtown Detroit, to service Blue Cross Blue Shield's tech needs? Yes, it would take some capital – more than $7 million – to get off the ground. But space and training savings would be immediate. And other firms could help defray costs by also signing on to the venture.
"Here in Michigan, we've had so many layoffs in the last three years," said Pasky. "We have an incredible base of IT talent. We'd like to have it stay in the state, not have people move."
Total savings would be less than if the company had outsourced overseas – "less than half of the money," Harvey said, "than we would have saved if we had gone offshore."
But, he said, "We had other things that were valuable to us."
Harvey said he hoped the project would be more than adequate to meet Blue Cross Blue Shield's needs. "We have a number of different systems and platforms that we operate, from mainframe to mid-range to Web. We have a pretty large IT operation. We have development needs, testing needs, across all of those platforms in order to support and deliver our many projects and initiatives."
All of it housed in an urban development center (one that has the added convenience of "being right down the street from us") that Harvey hoped would "benefit southeast Michigan and the city of Detroit, and keep jobs right here."
It's an idea, Pasky said, that could easily – and very well might – be adopted by other companies in other cities. "When I get in front of other executives and tell them what we started here, they're very, very interested."
