IT outsourcing companies that have lost their jobs say their job security has been threatened
AUSTIN, Texas — AUSTin, Texas-based outsourcing company called Kiva, which had been in a state of financial and legal limbo since 2014, has filed for bankruptcy protection in the United States.
Kiva is part of a growing number of outsourcing firms that have been facing financial troubles, often with a high risk of default.
Kiva filed for Chapter 11 bankruptcy protection last year.
It was the second time in less than a year that Kiva had filed for that kind of bankruptcy protection.
In December, Kiva said it would close its doors for good.
In a statement to the Austin American-Statesman, a company spokesperson said Kiva’s current business model is unsustainable.
“We have seen the potential for the company to be profitable, but the business model has not worked for us.
Kivisma’s business model cannot continue to operate with us and is unsustainable,” said the statement.
The company said in a statement that it has no plans to reopen its doors and it is “fully prepared to exit the business of outsourcing to the United State in the near future.”
Kiva has about 4,400 employees.
It has filed bankruptcy protection for the fourth time in five years.
In February, Kivas former CEO and president, Paul Crampton, was arrested on charges of fraud.
Kivas business model relies on paying employees for services they perform for clients and then getting those services paid for.
The company charges workers based on how much they perform.
For example, if a team member performs 25% of what a client would have asked them to, the client would get paid 50% of that amount.
The former CEO of Kiva was arrested in 2016.
He had pleaded not guilty.
In February, The Texas Tribune reported that Kiva was losing money because of a decline in demand from American customers, particularly in the healthcare and home care industries.
The companies business model was unsustainable, and Kiva did not have enough employees to cover its expenses.
Kivas bankruptcy filing was filed after Cramton was arrested for his role in the fraud case.