By John Donovan of RoyalDutchShellPlc.com

I co-own a website focused on the activities of the oil giant Royal Dutch Shell Plc. On 19 December 2007 we received an email from a Shell insider attaching an email sent on behalf of a Shell IT Vice President earlier the same day.

The leak led to further correspondence with the same insider and to related correspondence with Michael Brandjes, the Company Secretary and General Counsel Corporate of Royal Dutch Shell Plc. Mr Brandjes is in our view one of the good guys at Shell. He responds to our emails even though Shell executives ignore them. We have found him to be unfailingly courteous and efficient. He has also acted in a decent and helpful way to third parties in certain matters of which we are aware.

We eventually passed the job cuts information to the news media and several articles have been published including…

Reuters:

http://uk.reuters.com/article/oilRpt/idUKL2158046320071221

CNNMoney:

http://money.cnn.com/news/DOWJONESD/FORTUNE5.htm

The Sunday Telegraph:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/30/cnshell130.xml

In view of the importance of the story, we have decided to publish some of the correspondence including comments made by the insider who has stated that up to this point, Shell had been a good employer, but that they now feel a sense of betrayal.

For security reasons the information has been edited by the source prior to this publication.

FIRST EMAIL DATED 19 DECEMBER 2007 FROM A SHELL IT INSIDER

Love your website. I am one of the 3200 shell employees that will be losing their jobs at Shell due to this outsourcing, which is stated to be extreamly large. Thought you might find this interesting.

Regards.

(A Shell internal email authored by Shell IT Vice President Swee Chen Goh on the same day – 19 December 2007, was supplied by the insider. It is included in the correspondence with Shell below)

SECOND EMAIL DATED 19 DECEMBER 2007 FROM SHELL INSIDER

The most frustrating thing about all this is that Shell employees are getting traded like commodities. We are expected to join the outsourcer without knowing what we will be paid or how we will be compensated, or worse yet, how we will be treated! They talk about how we are getting ‘treated fairly’ but it is anything but.

EMAIL FROM JOHN DONOVAN TO MICHAEL BRANDJES

—–Original Message—–

From: John Donovan [mailto:john@shellnews.net]
Sent: woensdag 19 december 2007 19:46
To: Brandjes, Michiel CM RDS-LC
Cc: van der Veer, Jeroen J RDS-CEJV; Wiseman, Richard RM SI-LMAPF

Subject: Leaked Email: An important news story.

Dear Mr Brandjes

Can you kindly advise whether the email printed below is authentic? If it is, the story is obviously of major importance.

We would not wish to publish or pass on information of great potential concern to a large number of employees without giving Shell the opportunity to say if the information is a hoax, even though we have good reason to believe that it is authentic, having been received from a Shell insider source.

The insider says that 3200 Shell employees will be losing their jobs due to this outsourcing, which they say is the largest any company in history has ever undertaken!

I would be grateful if you could treat this as a matter of urgency.

Best Regards
John Donovan

THE EMAIL

—–Original Message—–
From:     Gorelova, Svetlana SITI-ITI   On Behalf Of Goh, Swee-Chen SEPL-ITI
Sent:    December 19, 2007 8:29 AM
Subject:    Infrastructure Sourcing Programme – Final Investment Decision
This message is sent out on behalf of Swee Chen Goh
__________________________________________________________

Royal Dutch Shell Chief Executive Jeroen van der Veer approves proposal to outsource a substantial part of IT infrastructure services to three suppliers.

IT Services receives mandate to complete contract agreements with selected suppliers.

Dear Colleagues,

2007 has been a very busy year for all of us, both in terms of sustaining our service delivery as well as in dealing with change.  Early December the Infrastructure Sourcing Programme (ISP) submitted the proposal to outsource a substantial part of our IT infrastructure services to the RDS Board.  On behalf of the RDS Board and Executive Committee, our Chief Executive Jeroen van der Veer has reviewed and approved our proposal.  We will therefore proceed with implementation in 2008.

After short-listing six suppliers in September 2007, and due diligence work in October, the ISP team requested and received Best and Final Offers from six suppliers in November.  These offers were evaluated and ranked, using a set of criteria that balanced operational, people and financial aspects.  This has led to the proposal to outsource the Infrastructure service bundles to the following suppliers:

•    End User Computing Services: EDS
•    Hosting and Storage Services: T-Systems
•    Managed Network Services: AT&T

Subsequent to the approval, the following steps to implement will now be taken:
•    The selected suppliers have been invited to finalise contracts, which we expect to be signed at the end of March 2008.
•     Staff consultation as legally required will commence from January onwards.
•     New and significantly changed jobs in the new IT Infrastructure Organisation will be posted on Open Resourcing (OR) from December 21 until January 25.  Staff appointments will be announced in February and March 2008.
•     Establishing the new IT Infrastructure Organisation and onboarding of staff will be prepared during the first and executed during the second quarter of 2008.
•     Transfer of services to suppliers, involving the transfer of staff, contracts, assets and in-flight projects, will be planned and prepared during the first half of 2008.  Service commencement date is targeted for July 1, 2008.

To keep you informed and engaged, important communication has been scheduled:
•    Webcasts for all IT Infrastructure staff on background of the supplier selection and the next steps will take place on January 8, 2008.
•    Facing Change Event 2 will start on January 8 in the hub-locations, providing an opportunity to meet the selected suppliers and learn more about their employee value proposition.
•    The ISP newsletter will be issued end of January, with further details on the planning and preparations for service transfers and activation of the new IT Infrastructure Organisation.

In the meantime, Shell will continue to rely upon its current suppliers of IT infrastructure services.  In due course, we will engage with these suppliers to discuss the future working relationship.

You will find more information on the way forward, in particular around the timeline and the open resourcing process, in the latest issue of the Infrastructure Sourcing Newsletter.  I would like to encourage you to regularly check the Programme website at:

http://sww.shell.com/it/infrasourcing/index.html

This announcement may lead to an increase in external enquiries.  We are carefully managing this process, but in case you are approached directly, please refer all enquiries:

•     from suppliers to Ann Perrin (Strategic Relations) at +1 832 512 7315;

•     from any other external party to Sarah Smallhorn (Media Relations) at +44 7768 773 202.

I acknowledge that there will still be uncertainty as we are working through the finalisation of contracts, open resourcing and transition preparations.  I encourage you to keep an open mind and take the time to learn more about the suppliers as employers and as business partners.  As always, members of the IT Services Leadership Team are available to answer your questions.  Please do not hesitate to reach out to them.

Kind regards,

Goh, Swee Chen
Vice President IT Infrastructure

FURTHER EMAIL FROM JOHN DONOVAN TO MICHAEL BRANDJES

Wed 19/12/2007 23:01

Dear Mr Brandjes

The following is an extract of further information supplied by an insider: –

The most frustrating thing about all this is that Shell employees are getting traded like commodities. We are expected to join the outsourcer without knowing what we will be paid or how we will be compensated, or worse yet, how we will be treated! They talk about how we are getting ‘treated fairly’ but it is anything but.

We have also been supplied with more Shell internal documents. It is fair to say that the chance of this all being an elaborate hoax is now just about zero. I do not think it is necessary to put the further documents to you. If you confirm that the email is genuine that will suffice.

If Shell has any response, comment, or explanation, no doubt you will kindly let me know.

The timing of this news, just before Christmas, is of course most unfortunate and must have left the relevant individuals, said to number 3200, understandably short of seasonal spirit and goodwill.

Best Regards
John Donovan

REPLY FROM MICHIEL BRANDJES

From: Michiel Brandjes
Sent: 20 December 2007 12:09
To: john@shellnews.net

Subject: RE: Leaked Email: An important news story.
Sensitivity: Private

Dear Mr Donovan,

The email is authentic. It is not a matter of a leak though. Shell is currently in the midst of finalizing contract negotiations with selected suppliers to outsource IT Infrastructure.   This has been public knowledge since the announcement of a study to outsource a substantial part of IT Infrastructure to a few selected suppliers in Oct 2005.   This decision has been the outcome of a transparent process involving employees and relevant works council.

Best Regards and Merry Christmas,
Michiel Brandjes
Company Secretary and General Counsel Corporate
Royal Dutch Shell plc
Registered office: Shell Centre London SE1 7NA UK
Place of registration and number: England 4366849
Correspondence address: PO Box 162, 2501 AN  The Hague,
The Netherlands

Internet: http://www.shell.com/

EMAIL REPLY FROM JOHN DONOVAN TO MICHAEL BRANDJES

From: John Donovan [mailto:john@shellnews.net]
Sent: 20 December 2007 13:30
To: Michiel Brandjes
Cc: Jeroen van der Veer
Subject: RE: Leaked Email: An important news story.
Sensitivity: Private

Dear Mr Brandjes

Thank you for so quickly confirming the authenticity of the email. I do not know how else it could be described other than as a leak bearing in mind that it reached us on the same day it was sent on behalf of a Shell Vice President and we were most certainly never an intended recipient.

I appreciate that some of the content is public knowledge but it also contains new information including the important fact that the basic plan has now obtained board approval. We also have evidence of genuine concern, some of which you have seen. I believe the content will be of interest to many parties including Shell stakeholders and suppliers, as it reveals more information than Shell would have wished to openly disclose. It also provides further evidence that our website is seen as the main outlet for Shell whistleblowers and disgruntled Shell employees.

I am most grateful for the speedy confirmation and the further information and comments you have kindly supplied. If we decide to publish an article ourselves, then your full response will be included on an unedited basis. If we instead pass the story to a news organisation, we will let them have a copy of the email correspondence with you so that they are fully aware of your comments.

Many thanks again.

Best Regards and Merry Christmas
John Donovan

EXTRACTS FROM FURTHER INFORMATION SUPPLIED BY THE SAME INSIDER SOURCE

Hi John,

I apologize for the rashness of my e-mails, I merely am using this as a medium to vent, as you probably can assume this is a bit frustrating for people in my situation. I had no knowledge you would forward the e-mail I sent to the top, so the least I can do is clarify a bit.

– To be fair to Shell we have been aware of the outsourcing for at least 6-8 months. It was not until very recently however that we found out which jobs were mapped to be outsourced, and who is taking over the contracts. It is speculated that it still will take at least another 6 months for the full transition to become complete, given the scale of the project.
– I myself was a loyal shell employee. I do believe they are a good company to work for and they treat their employees well: except for some situations such as this. The feeling of working for many years and giving to a company, to all of sudden be encouraged to join an outsourcer has a feeling of betrayal to it. I do realize that things could be much worse. They are VERY heavily persuading us to join the outsourcing partners. There are jobs for us, just not the ones we signed up for. We signed up to work for Shell, not an outsourcer, and there are no guarantees of the unknown. Who knows what will happen once we’re handed over to another company. Will we train their people and then be asked to leave in a year?
– Yes, the numbers I have heard are approximately 3600 will be affected by this ‘transition’. About 400 jobs or so (reserved for management staff) will be left in the retained organization to form a  committee on what services will be delivered and how. However, a large proportion of this staff are not Shell employees. They work for Shell, solely for Shell, on behalf of Shell. None the less, many people will be affected when they are told they are moving to a multiple client company.
– Yes what Shell is doing is very unfortunate and not very fair. Especially for those of us who want to stay working for them. It seems that they are more concerned with having us work for their partners than working for them (perhaps of the cost savings?). But Shell isn’t the first company to do this to staff, nor will they be the last.
– I brought this information to you because I was surprised that a deal of this magnitude was not in the news. Shell has been very good to me. You say Shell is another ruthless oil company and I don’t quite want to believe that, not just yet. For the team being, as long as the need for oil is there, it just seems to be a necessary evil.

You shouldn’t have to look hard to find employees that would be willing to talk. I can assure you that any non-management Shell employee slated for outsourcing will share my views. I have not talked to one individual who looks at this as a positive career move or smart move for Shell.

Regards

COMMENTS BY OTHER SHELL INSIDERS

John

I write this note to you as a very concerned ‘insider’. It appears Shell has not learned from the past and now is embarking on yet another stepchange (note very carefully the word change, not improvement) by getting rid of the bulk of  IT people. They are also divesting several producing fields. (Those are riskfree things that  need to be milked. It is like a farmer selling his farm whereas he really should sell the produce!)  Is Shell perhaps preparing itself for a take-over by Gazprom?

On the IT reorganisation: it has been decided to shed the bulk of the staff in IT and only keep people from a certain senior jobgroup level upwards. That level means they have already lost touch with technology and are mere administrative department heads etc. This means all real expertise will be lost. And a few years ago someone clever in Philips NV stated: ‘if you cannot make it anymore, you also cannot manage it’. And here is the crux of the disaster which is certain to follow. On paper it looks fine, reducing costs and letting the real experts do the work. But the handing over of Shell staff to IT companies will be extremely costly because all kind of securities for the staff are built in. Some 15 years ago NAM sent all their drilling staff to Deutag because there they would be better off. NAM only kept the drilling engineers. To cut a long story short: after a few years NAM took all these drillers back at vast expense. They all found it too cold outside the warm blankets of Shell…. Everyone had been unhappy during the whole period and performance had gone down the drain. The amount of management time it took must have been enormous.

The same is bound to happen with IT. Obviously one should contract out all the standard Bill Gates stuff on the PCs, but that is only a small part of the IT in Shell. Development of new technologies will stop in Shell and they become dependent on others. The good people are already fixing jobs for themselves but wait a little so they score the big redundancy bonus and then go work somewhere else. IT nerds are just like people!!!

Various technologies will be at different contractors: first line is now in Bangalore, but that is only for the most simple stuff and there is great irritation at dealing with Indians who speak poor english and have zero authority and little know-how and experience. The second line is also in India with Wipro. The third line is yet again somewhere else, telecom with BT etc etc. All these should work together on issues and on paper this will be done with the famous Service Level Agreements (SLAs). Bureaucratic nightmares and licences to print money for the contractors.  It now is already difficult to have the various technologies work together when they share offices on the same floor and know each other personally. So the mind boggles what will happen when they are strangers on different continents. The salaries in India are increasing sharply so in order to keep the costs low, the level of service will reduce, whatever managers in Shell want or get promised. I am convinced this is a cheap way to make a career for a few people in Shell and the ‘unintended consequences’ will be for someone else to sort out. The people who outsourced the first and second line to India etc., all have left now with bonuses and promotions but many customers don’t want to speak with the call centres anymore.

The upcoming contract will be horrendously expensive to Shell because all the job securities for Shell staff need to be paid for by someone. Else those staff will not go ‘voluntarily’. I believe many still have the right to apply for jobs within Shell for 5 years. That is not a way to make a clean cut. It is muddling on and moving problems to the future.

So, mark my words, the IT within Shell will quickly go down the drain, there will be some real problems and IT development will stop. Whatever Jeroen may say about keeping and growing worldclass expertise!

And of late there is the announcement that Finance will start to shed staff. It reeks of Voser doing a Watts to the outside world. IT shedding staff, then I will also shed more staff and cut costs. He must be manoeuvring to get in line to replace Jeroen. Nice guy, quite competent, but a real Oilcompany needs an Oilman, not a banker. I thought we had learned with Herkstroter. But memories are short.

So, soon we may have a Finnish telephone maker chairing a business run by a Swiss banker and supported by a HR man. And these people need to ensure that the correct investment decisions are taken in this very tough world of Oil and Gas?  They only make it easier for Gazprom to shed the top and keep the engineers.

Perhaps you see merit in publishing this.

COMMENT FROM A SHELL INSIDER

For Streamline Project see:

http://www.shell.com/home/content/aboutshell-en/our_strategy/upstream_downstream/more_upstream_profitable_downstream_07112006.html
“More upstream and profitable downstream”
We as employees read it: … *only profitable* downstream.
But where do we have left a real profitable downstream??
So, what will be left besides upstream?
Outsourced, outplaced and francised downstream?

>>> Managed by 3-5 Shell shared service centers worldwide?

Seems, we will go this way…
All IT infrastructure a Shell is on change now to one global structure.
What for?
For handing it over to 3rd party service, as we can read at your site…

Cheers,
a Shellist

SELECTION OF RELATED COMMENTS POSTED ON LIVE CHAT

guest_2340 : Anyway, Shell top management is not concern with its reputation and security issues. IT and Finance nerds, you are the walking dictionary of Shells know-how. Please do share the insider stories at Mr Donovan’s website and let’s have party time.

guest_6826 : John thank you, I like the story of the farmer selling the farm instead of produce wrt massive job cuts in IT, Finance, etc . The Chinese have a proverb ..”to eat up the children and grandchildren’. Was the saying too tough to swallow for you Mr Veer and Brinded? You promised the City the organic growth in RRR after the reserve fraud and what is the status after 3 years. I hope you will not declare yourself as a lucrative traders company and/or brokering for takeover?

guest_6131 : D-Day, no there’s nothing to worry about people. It’s not like we’d let someone from HR run the largest country…oh hang on…what money would you get on the next CEO being from Finance?

guest_7614 : It is not surprising that Shell is implementing its outsourcing plans starting with IT jobs. The project is even at wider scale involving all related processes in other corporate sectors such as SC, distribution and Finance. the upcoming job cutting within Shell is not only due to outsourcing but also to the big streamline project.

guest_5408 : As a former EDS employee conscripted from Kraft when they signed an outsourcing agreement with EDS, I wish all the Shell IT folks my best. My advice is put it all behind you and find another job. EDS has no leadership and their game is to ultimately replace anyone they absorb with young, dumb and cheap help.

guest_7002 : Too bad Shell..your faithful employees – many former and current – are no longer in mind, body and strength working enjoyabl y for you because you betray them especially in their near retirement age. Why not you do a survey to find out how motivated they are in leaving your outfit.? Good luck to Sakhalin and we didn’t hear more of Bonga. Why is that so Mr. Brinded?

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