The bulk of the Texas Department of Transportation’s information technology services will be outsourced July 8 under an agreement with a multinational Japanese company announced Monday to the technology division’s 350-plus employees.
About 300 employees, half of whom work in Austin, will lose their state jobs, but are being offered jobs with Tokyo-based NTT Data. They would continue to work from the same TxDOT facilities where they currently work. All but a handful of those workers will immediately have health care insurance coverage, and all will be paid “equal or more than what they’re making now,” Howard Langsam, NTT’s senior vice president for public sector sales, told the American-Statesman on Tuesday.
Agency officials say the $190 million, five-year contract with Tokyo-based NTT Data, which did not come before the Texas Transportation Commission for approval, will save TxDOT about $30 million a year, according to the agency. The deal includes a possible two-year extension.
TxDOT spokesman Bob Kaufman said the agency’s technology cost currently is about $110 million annually. TxDOT officials have said over the past few years that the 12,000-employee department’s information technology system is archaic, and that makes it difficult for the agency to properly track and run TxDOT’s $10 billion-a-year operations.
“NTT will help us develop better software, and the cost to service newer programs is less,” Kaufman said. “We expect NTT to be more efficient.”
Information technology employees were given a week to decide whether to move to NTT, according to one technology staff member, who wished to remain anonymous for fear of losing the opportunity to be hired by NTT. Those who go to NTT would be guaranteed employment for six months, TxDOT and NTT officials said.
Langsam said it would be “a very reasonable assumption” that most of the former TxDOT employees would retain their jobs after that six-month guarantee. NTT, Kaufman said, “has a track record of retaining and developing transitioned employees over time.”
For some, the transition could mean the loss of considerable unused leave time. Employees will be paid for up to three weeks of unused vacation time, TxDOT technology workers said, but get no compensation for accrued comp or sick leave time.
NTT and TxDOT officials couldn’t confirm Tuesday that employees would lose those benefits. Kaufman said state pension law, not TxDOT or NTT, would determine what rights the agency’s employees have to pensions or any other elements of the retirement system.
TxDOT will retain about 50 information technology workers in-house, “largely to define standards and manage our contract,” Langsam said. Langsam and other NTT employees spent much of Tuesday at the Omni Hotel in downtown Austin briefing TxDOT technology workers.
The TxDOT information technology department has lost about 50 of its employees since the beginning of the year, about half to retirements, according to the agency.
The agency said that the changes were a year in coming and that a solicitation for interested companies went out in January. NTT, according to its website, was founded in 1967 as a spinoff of Nippon Telegraph and Telephone Public Corp. Langsam said the publicly traded company — with more than 18,000 employees in its “Americas” division and about 60,000 worldwide — handles information technology services for agencies in 14 other states.