Health systems ease up on IT layoffs
ILLINOIS, UNITED STATES — The wave of information technology (IT) workforce reductions that swept United States health systems in the first half of 2026 is showing signs of slowing, with more organizations turning to vendor partnerships rather than direct job eliminations.
The trend is drawing attention from hospital executives facing the same financial pressures that drove the earlier rounds of cuts, without the reputational costs of direct layoffs.
IT staff shift to vendor contracts
Care New England, the Rhode Island-based health system, transferred nearly 160 IT employees to Kyndryl, an IBM spin-off specializing in managed infrastructure services, and the model appears to be gaining traction across the sector.
According to Becker’s Hospital Review, the move cut operating costs while offering transferred employees career development paths at the new employer, according to Care New England’s chief information officer.
Tomas Gregorio, chief information officer at Care New England, said the outsourcing arrangement delivered its intended results despite early friction.
“Despite a rough transition, Kyndryl adapted well, and we revised our governance framework to stay aligned with our strategy,” Gregorio said.
The Care New England and Kyndryl arrangement is emerging as a reference case for health systems examining whether outsourcing can replace workforce reductions as a primary cost-management tool.
Vendor transfers replace direct job cuts
The spring and early summer of 2026 saw direct IT layoffs at scale across the sector. UnityPoint Health cut 207 IT positions in April, MaineHealth eliminated 83 IT and analytics roles in July, and Central Maine Medical Center shed 38 roles in May.
The cumulative impact drew scrutiny from healthcare labor advocates and raised questions about continuity of clinical support systems.
By August, the pace of new IT layoff announcements was slowing as more health systems moved to the vendor transfer model.
PeaceHealth notified IT staff of a partnership with Tech Mahindra, an India-based managed services firm, in late July, transferring IT functions rather than eliminating them outright.
For health systems under sustained margin pressure, outsourcing IT operations to a specialized vendor offers a middle path. Functions that remain in-house can focus on clinical integration and governance, while vendors handle infrastructure and support.
Health systems evaluating these models can compare options across the top healthcare outsourcing companies in the United States.
The broader shift mirrors trends in other hospital administrative departments, where business process outsourcing (BPO) partners increasingly handle revenue cycle management (RCM), medical coding, prior authorization, and clinical documentation.
As artificial intelligence (AI) tools reshape both IT and administrative workflows, the calculus around in-house versus outsourced headcount continues to shift.
Related news
- Health systems turn to vendors for IT in 2026 · 27 Aug
- Health system to cut 83 IT, analytics jobs · 18 Aug
- PeaceHealth to outsource IT to India’s Tech Mahindra · 11 Aug
Disclosure: Outsource Accelerator uses AI tools in the backend of its editorial workflow. Every article is reviewed and verified by a human editor before publication.
Stay ahead in healthcare outsourcing. Join thousands of healthcare and business leaders who rely on Outsource Accelerator for the news, trends, and expert insights shaping medical BPO and the future of care delivery. Subscribe to our free newsletter and never miss an update.
