The United Services Automobile Association, once a revered institution dedicated to serving military personnel and their families, has faced a precipitous decline due to decades of outsourcing, flawed management practices, and reliance on foreign labor. What was once a symbol of American pride and financial stewardship now grapples with internal dysfunction, eroding trust among its members and employees.
A series of cost-cutting measures initiated in the early 2000s under then-CEO Robert G. Davis set the stage for USAA’s unraveling. Davis outsourced critical IT and operational functions to H-1B contractors, including Tata Consultancy Services, which imposed rigid staffing requirements that led to overstaffing and inefficiency. Employees described a chaotic work environment where idle workers were assigned menial tasks, and conference rooms were repurposed into “laptop farms” to meet quotas.
Insiders allege that these policies created a toxic workplace culture, marked by chronic underperformance and a lack of accountability. Projects once handled efficiently by U.S.-based employees were handed to H-1B contractors who often lacked the necessary skills, forcing retraining and delays. Meanwhile, American workers were laid off en masse, replaced by foreign labor that allegedly exacerbated costs and eroded institutional knowledge.
The consequences have been severe. Federal regulators have penalized USAA for failed audits and anti-money-laundering violations, prompting the sale of key divisions like real estate. Customers report poor service from underqualified H-1B staff, with one describing a frustrating ordeal resolving a fraud alert that required direct intervention from top executives.
Security risks have also emerged as USAA outsources critical functions, including anti-money-laundering work, to Indian-based contractors. Personal financial data of U.S. service members and veterans may now be stored or processed abroad, raising concerns about compliance and privacy. Additionally, the company shares customer information with third parties like LexisNexis without opt-out options, further straining trust.
Internal morale has plummeted, with at least three employee suicides linked to the company’s toxic environment. Former directors describe a cultural shift away from USAA’s military roots toward divisive diversity initiatives, including mandatory DEI events and celebrations of non-American holidays. Employees have reported religious discrimination and a stark decline in satisfaction, with internal surveys showing only 33% approval.
Analysts warn that USAA’s reliance on foreign labor and systemic instability has undermined its reputation for reliability and service. Whether the institution can recover hinges on addressing these deepening crises without compromising the trust of those it was founded to protect.
