Tyson Foods outsourcing will ‘displace’ 330 tech employees

Tyson Foods officials said Thursday (Feb. 27) the company has hired an outside service provider for certain IT services, a move that will result in the “displacement” of roughly 330 employees. The name of the outside service provider was not disclosed in a company news release. Tyson Foods spokesman Gary Mickelson said the provider is a global company with offices across the U.S. – including Northwest Arkansas – as well as other parts of the world.

“While it’s the right thing to do for the business, it’s a very difficult decision,” Scott Spradley, the company’s chief technology officer, said in a statement. “That’s because it will result in organization changes in our information technology team, including some job loss.”

The transition to the service provider will take place over the next several months and result in the displacement of about 330 IT employees, mostly in Springdale and Chicago. Some of the employees will be offered a position with the service provider. Others will be offered a severance and benefits package. Tyson Foods is also bringing in a career transition services firm to help displaced employees find new jobs.

In the news release, the company said the 330 displaced employees represents a large number of the positions Tyson Foods previously disclosed it was eliminating through a restructuring program that started late last year.

Tyson Foods said the outside service provider will accelerate the transformation of the company’s digital technology capabilities and reduce costs.

“The speed and scale of new technology presents a huge opportunity for us,” Spradley said. “While we’ve made significant progress over the past two years enhancing our computing systems and digital capabilities, we need to drive more rapid improvements in our digital transformation to remain competitive.”

The company said its IT leaders went through a year-long review that led to the decision.

Thursday’s announcement is a major pivot for the meat giant, which just two years ago had plans to turn downtown Springdale into a tech hub, building and opening a state-of-the art robotics and innovation center. Tyson Foods added roughly 300 tech jobs to downtown Springdale in the past two years after the hiring of Spradley, an Arkansas native.

“We’ll still have about 500 IT team members and expect the number to grow as we invest in more high-skill IT positions,” Mickelson said in an email to Talk Business & Politics. “Downtown Springdale will also continue to be the primary home of our IT team.”

Tyson Foods has invested more than $215 million in automation and robotics in the past five years and the new center has been described as “ground zero” for where the company creates and tests new technology, as well as train the workforce of tomorrow.

The move to outsource certain jobs is not a new trend. Walmart did it with financial jobs last year, outsourcing to GenPact. The company has since invested in the region with plans to grow employment in Bentonville.

Mike Harvey, chief economist with the Northwest Arkansas Council, said without knowing who the third party is, it’s tough to gauge the impact on the region. He said tech jobs can largely be performed anyway and that’s a challenge for growing a tech cluster in one place.

Tyson Foods did not say how many of the 330 IT jobs will come from Springdale. Spradley was brought on to grow the local tech team and engage Tyson Foods’ technology transformation. In May of last year, Spradley told Talk Business & Politics recruiting tech talent to Tyson Foods was important for the company’s future.

Spradley said in May 2019, his vision for Northwest Arkansas was to become a technical center, and perhaps downtown Springdale could pick up the moniker of “T-Town.”  He had conversations with J.B. Hunt Transportation Services and Walmart to work together to build a consortium that would draw technology talent from around the country to work on blockchain applications that could be used in their respective businesses. He’s also supportive of collaboration between corporate partners and academia.

With so many companies recruiting tech talent and the limited supply locally, Spradley previously said he’s discussed the possibilities of companies working together to travel to larger cities like Austin, Texas, San Diego, Raleigh, N.C. or Boston and start laying out technology road maps to draw in professionals who want to be a part of the growth in Northwest Arkansas.

Editor’s note: Talk Business & Politics senior analyst Kim Souza contributed to this report.