IBM to Lay Off Half of Global Services Division

Rolgar writes "Cringely says that IBM has begun massive layoffs in a quiet manner, starting with 1300 employees, but by the end of the year, the total will rise to at least 100,000 and probably closer to 150,000 employees, nearly 40% of their U.S. workforce. Some people will be temporarily retained as contractors at a fraction of their salary, and eventually, IBM will also dump many of the unprofitable customer contracts worked on by Global Services or outsource the work to Asia. If these people are looking for work, that could seriously drop wages for technical workers in the US since they will have to compete with these people for available jobs."

Comments

Thanks Cringely

[winkydink]

I'll wait until I hear it from a journalist. No, you're not.

Re:Thanks Cringely

[phalse phace]

Sounds like they need to get rid of Sam Palmisano instead.

Re:Thanks Cringely

[jeffmeden]

Since Americans started getting squeamish about hearing the term "Massive layoffs". Sure, they aren't going to announce it to the world as such. Once the layoffs pick up pace (assuming this report is true) IBM will start touting the 'revenue improvement' due to the 'cost saving measures' of their 'recent reorganization' that coincidentally involved eliminating a bulk of their labor. Then, watch as stock prices soar on news of improved profit per share.

Re:Thanks Cringely

[Ryan Amos]

Americans get squeamish about massive layoffs, but investors certainly do not.

Re:Thanks Cringely

[Johnny5000]

Americans get squeamish about massive layoffs, but investors certainly do not.

That's because "Americans" actually have jobs and work for a living, and are concerned that their job may be next on the chopping block, and "investors" can just shuffle their money from one investment to another without that concern.

Re:Thanks Cringely

[Cutting_Crew]

"Employees face not only job loss but the indignity of training their off shore replacements."

i know how to handle this. tell your boss or manager AND/OR IBM to shove it. tell them you WILL NOT train the very person who is going to replace your job for the sheer means of satisfying the stockholders. if they want the cheap labor that bad, then let them figure out how to train them and pay for them to be trained themselves.. and try to do that from 5,000+ miles away. then let's see how they feel about offshoring.

Re:Thanks Cringely

[MightyMartian]

It's true of most corporations, but most certainly true of IBM that management never get touched. They really only did a management purge once that I'm aware, back in the early 1990s, and that was just middle management. It's a general rule that the incompetent CEOs get to completely fuck over the company in every possible way before someone finally figures out that they shouldn't be left alone to manage a Dairy Queen never mind a multi-billion dollar company. Part of that fucking up is to fire a good portion of your workforce, outsource them to India, demoralize the remaining workforce, have your projects then seriously compromized, your customer satisfaction go down the tubes and then watch a stagnant or downward-pointed share price now start some sort of nasty nose dive. Finally the board and the shareholders get all pissed off, fire you (which means paying you millions to vacate your office), and you head off to some other company and start fucking them over.

Re:Thanks Cringely

[shofutex]

Even if they do get fired for fucking up, they get millions of dollars anyways. You walk away rich whether you're good or bad--where can I sign up?

Re:Thanks Cringely

[Alioth]

The dollar is already collapsing - it wasn't all that long ago when £1 bought only about $1.45. Now £1 will buy $2 - and there's every indication that the dollar is going to continue losing value.

This does at least insulate us from the rising cost of oil for the time being, since oil is traded in US$, and US$ is falling almost as fast as the price of oil is rising.

Re:Thanks Cringely

[RobertM1968]

That's what happened at CompUSA... all the upper management we liked and respected (who seemed to care about the "grunts") all upped and left... by the time us on the front lines knew what happened and was happening, it was too late - though some of the uppers did try giving us hints...

Re:Thanks Cringely

[Dystopian Rebel]

"Real democracy" doesn't exist.

If it did, it would be crushed by plutocratic capitalism.

Re:Thanks Cringely

[Red Flayer]

since oil is traded in US$, and US$ is falling almost as fast as the price of oil is rising.

Insulates you in Great Britain; doesn't insulate the US. Furthermore, we're very close to seeing oil traded in EUR or in a 'basket' of currencies. One of the primary reasons for the current war in Iraq was that Iraq was starting to sell oil in EUR (another was the hope that US control of Iraqi oilfields could have broken the back of OPEC).

If oil comes off the dollar, the US is even more screwed, since petrodollars will stop coming into the US, and other nations will have less reason to hold USD. Furthermore, there will be less incentive for countries like Korea, China, and Japan to buy T-Bills (which they currently do for a *negative* return once dollar depreciation is factored in) -- which results in them selling them off, which then causes the dollar to drop further.

All in all, there are several major factors currently propping up the USD, and if any one of them were to fail, it's likely the others would follow, resulting in economic disaster for the US, with much of the world to follow.

Note that depreciation of the dollar is a positive for USD debt servicing, which is a major reason why it's been allowed to continue. As soon as the US is forced to take it's debt in other currencies, however (which will likely be around when oil comes off the USD), then the US is in a world of pain.

As for me, I'm contributing to the problem by investing most of my money overseas -- but I can't accept the risk to my long-term investments by having them here in the US.

Re:Thanks Cringely

[tungstencoil]

I cannot speak for IBM per se, but my corporate experience (both personal, and watching those around me) is that often severance packages are tightly tied to "continuing to perform your duties as assigned", which (at that point) means: show up, play nice, and train your replacement. If you don't, not only are you out of a job (and probably earlier than you thought), you don't get your severance pay.

Re:Thanks Cringely

[Danathar]

Sounds like a recipe for more of the violence like happened down at NASA. Out of 100,000 layoffs how many of those might be psycho/sociopaths?

Re:Thanks Cringely

[umbrellasd]

The most important part of what you just said is that it doesn't take long for people to realize how screwed up the mass layoff was, and then a good portion of that 40% gets reabsorbed back into the machine. So people are worrying that these people will saturate "the market" but in all likelihood, firing half your workforce does absolutely nothing to teach you how to be 40% more efficient. Which means unless some radical transformation in management occurs (and as you just pointed out that's extremely unlikely), IBM will be just as inefficient before but now making 40% less of their customers happy and earning 40% less revenue, which means they'll go, "Oh, shit!" and have a mass hiring in short order.

As far as market saturation while they figure that out, you'd really need to take a look at the qualifications of these people and what work they are suited to as far as where they can realistically go to fill a job (where the employer agrees on their credential and pay level and so do they). Then maybe we could talk about the short-term impact of a glut of IT workers in those particular areas of IT, but again I predict it is just a transitory thing. And I suspect what some other people said is just exactly right. The perceived move to increase efficiency will drive up the stock in the short-term, some bigwigs will cash out, and then the reality of my first paragraph will set in and things will return to (normal - a couple hundred million in bigwig pockets).

And of course, flooding a market temporarily drives average salaries down, which means you can rehire your people at a 15% discount and thus you see just how it works. 100K employees * 15% ($50K median salary at time of layoff) * 1.5 year rehire loop = 1.125 billion dollars. If upper management did their homework, the revenue lost over the period is offset by the short-term float of the stock on investor optimism about the reorganization and there you go: about a billion dollars to spread around to the high rollers as they make a graceless exit, fat wallet in tow.

Digustingly clear isn't it?

Re:Thanks Cringely

[Thangodin]

Of course, massive layoffs never work. There are two kinds of employees--politicians and workers. The workers are too busy to see the boom come down, so they are the ones who get laid off. The politicians keep their eyes on the politics of the company, which means that they don't really have time to get much work done. They are really good at looking good--but not very good at actually getting work done.

Each time you downsize, you cut a disproportionate quantity of productive employees. Think of it as a crash diet; you waste muscle and increase the percentage of fat. This is why crash dieting is a good predictor of future obesity. It's also why companies that go through this binge/purge cycle become less and less competitive with each cycle. Look at Ford, GM, and Chrysler. How many times have they done this? My, now there's a success story...

Re:Thanks Cringely

[twilightzero]

I work at IBM and I've seen the results of this. It doesn't matter that they've created 70,000 jobs over there while getting rid of 50,000 jobs over here. The actual functional code/fix writing rate of Indian/Mexican/Chinese programmers is less than 1/4 the rate of their US counterparts. Why? It's not because they're dumb or uneducated. It's because those areas treat their employees like commodity replaceable units. They shuffle their people around month to month so they NEVER get any skill continuity or real expertise on a specific project. They view anyone with 5 years C++ experience, doesn't matter that you have have written embedded systems for 5 years and now they want you to write high availability communications software.

So they really need to hire 4-6 times the amount of programmers/engineers, at least for a few years, to keep up their current pace. And once the pace falls behind, the support goes to crap, and a few other things, the customers will leave in stampedes for better places...

What the hell *is* IBM Global Services?

[c0d3h4x0r]

So what (in a nutshell) is IBM Global Services? What do they do?

Re:What the hell *is* IBM Global Services?

[AslanTheMentat]

So what (in a nutshell) is IBM Global Services? What do they do?

They make really cryptic, bad commercials involving guys in Kubrickesque spacesuits wandering around data-centers.

*rolls eyes*

Ouch.

[daeg]

Let's just hope IBM layoffs are a blip on the map and not a sign of things to come.

Then again, any IT person not in a critical role should always be planning (financially, professionally, and personally) for layoffs or reduced compensation. IT is not, and never will be, a constant line of supply/demand. If you want job predictability, be a farmer.

It's also interesting they are dropping unprofitable contracts. Imagine if someone like Dell did that. More than 5 calls over the same user issue? "Sorry, sir, please repackage your computer and return it to Dell for a prorated refund. We are no longer interested in maintaining this support relationship or maintaining you as a customer."

Re:Ouch.

[daigu]

If you want job predictability, be a farmer.

Never been a farmer have you? Let's just say your boss is more fickle than any in IT.

Go with GCI, Ta-Ta, Sy People, etc

[WindBourne]

IBM is basically off-shoring their staff, and keeping their managers and execs. The problem is that is where all the waste is at.

OTH, the Indian companies are hiring American, but at lower pay. They treat the employees like cattle (presumably like they do in India) and have little to no benefits. But at least the management does not suck. The companies are able to make profits. IOW, it may be time to outsource the American managers who are terrible at doing their jobs.

Re:Go with GCI, Ta-Ta, Sy People, etc

[paeanblack]

OTH, the Indian companies are hiring American, but at lower pay. They treat the employees like cattle (presumably like they do in India)

I doubt you could have chosen a worse way to phrase your uninformed prattle. You are aware of how Indians treat cattle, aren't you?

Whatever happened to verifying sources?

[technomom]

Being an IBMer I was quite alarmed by this headline. But if you read the linked story, you'll see that Cringely is quoting his "many friends" at IBM.

That's not what news people would term a reliable source.

It's not to say that this might not be true but I'd like to hear it from something a little more reliable than Cringely's watercooler.

Re:Whatever happened to verifying sources?

[gstoddart]

But if you read the linked story, you'll see that Cringely is quoting his "many friends" at IBM.

That's not what news people would term a reliable source.

Cringely himself isn't what people would term a reliable source. He mostly writes speculative columns.

Cheers

A fraction of the salary

[optilude]

9.8/10 is also a fraction. And please stop the alarmist protectionist crap.

Re:A fraction of the salary

[hunterx11]

An allowance to buy salt is also a salary, but I have as much salt as I want and not as much money. Please stop the semantics crap.

Re:Fuck you IBM

[MontyApollo]

These are mainly services people, performing services for somebody. These somebodies are still going to need services even if it is not with IBM anymore. It is not like they are closing down a manufacturing plant; they are dumping customers, but these customers will just find someone else to do the work. Whoever picks up these contracts will probably need more employees. There will probably be net increase in unemployed people, but a portion much smaller than 100,000.

Re:Holy Outsourcing, Batman!

[Anonymous Coward]

>If an Indian can do the same job for cheaper, then they should be the one to be hired.
>... resting on their laurels...

This is such a pile of crap that gets re-spouted over and over. First, you choose the boundaries of your economy. If you go global with absolute free trade, then you are going to have people living in slums like in India, and healthcare like that of the third world, because that is your peer group. But until recently, the US did just fine by selectively trading with the rest of the world. Selective trading can create pockets of prosperity; we need to be smart and not just open our doors wide.

Second, the notion that US workers are all just sitting around on their laurels compared to the rest of the world is also a pile of crap. US workers work longer hours than most of the planet, and a good portion as just as productive.

So save your crap, because that is what it is.

Strange how management is never outsourced

[Viol8]

Ok , maybe a few low level ones are , but if these execs were *really* worried about their companies balance sheet, the first thing they'd do it outsource their own oversized salaried roles (unless they think the indians et al are too stupid to do it - unlikely). Funny thing is though , this never happens. As usual hypocracy floats to the top along with the bullshit and they'll fire the people who do the real work while taking home their own 6 figure salaries and heading off down the golf course. These people should be ashamed of themselves and what they're doing. Even for the self centred spineless leeches running a large company such as IBM there should be *some* sort of moral responsibility to your country, no matter what the bleating shareholders and accountants might say.

Re:Strange how management is never outsourced

[MMC Monster]

Considering the situation in the U.S., I'd rather increase my moral responsibility to the rest of the world. If we improve the standard of living in the rest of the world, maybe they will not depend on the U.S. in the future and maybe they will be more productive?

Re:Strange how management is never outsourced

[Anonymous Coward]

http://www.forbes.com/2007/05/03/ceo-executive-com pensation-lead-07ceo-cx_sd_0503ceocompensationintr o.html

this just reinforces what you just said. sad the salaries of some of these people

The days of monolithic apps are over

[esconsult1]

This is just a sign that the days of the white shirtsleeves are fast coming to an end. Several years ago, I interviewed for a programming position at a major wall street firm in New York. This IT department was filled with guys and gals in formal wear (coats, ties, long sleeve shirts etc). They were mostly banging out Perl and the pre-cursors to .net.

Yeah, the waste was incredible, and in I was glad I didn't get the job (regex skills weren't worth a damn those days -- who was I fooling?). I started working in a smaller shop dot-bomb shop and my regex skills improved overnight... this is all besides the point though :-)

Many of you here have worked on one project or another and you know that they frequently overrun both in terms of time and costs, and customer requirements that change even if no change was mandated in the contract. Can you imagine a few thousand projects like that in the IBM Global group? I can, and its a nightmare. Even though they charge the customers a mint, they must still be dramatically decreasing the size of their profits hand over foot.

But that pales in comparison, because we're into the era where you can now advertise on one of the popular tech blogs or Craigs List for your own people to come in, ramp up, do your project (you make the mistakes), ramp down and go into maintenance mode. Your contractors can also SSH in and make changes and tweaks from anywhere in the world, or in Pittsburg Pennsylvania (if you prefer to hire nationwide).

IBM Global is a holdover from pre-internet days when you contracted with a company to make a monolithic application that ran only on the Windows desktop or on your mainframe. Many corporate apps now run on an intranet in the browser and mostly consist of small apps that connect to the old monolithic applications. Heck, a friend of mine spent time hacking drivers that would connect through green screen terminal connections and get the data he wanted to spit out in html. Dare to make an app that only works in IE? Look to be embarassed in slashdot the next day.

Much time is spent talking about the latest version of thunderbird, or outlook, but the writing is on the wall. We're inexorably heading to the point where those kind of apps are moving to the way of the dodo bird. The future is gmail-like/google-like-apps for the majority of us. They just could not keep up.

Re:Fuck you IBM

[Teckla]

I don't understand why people get pissed when this crap happens. The company doesn't owe you a fucking favor. They hire, they fire, they do well, they do poorly. That's life. If you think it's "unfair", tough shit.

America has given many companies the fertile soil needed to create hugely successful businesses. Now these same companies have decided to take a big, stinky shit on that very same America, by offshoring everyone so that a tiny minority of people can go from super-ultra-rich to super-ultra-deluxe-rich.

If you don't see the problem with that, you're a moron.

Let Me Tell You How it Actually Works

[Greyfox]

Lets say you've got small project A. Small project A has 5 or 6 guys working on it. They've been working on it for years, wrote a good bit of the underlying system, know everything about it and can generally tell you exactly where the problem is if you call them with a problem.

Now you fire all those guys and hire a bunch of guys from Brazil at 1/4 the original team's salary. Even if the original team hangs around to train the new guys the new guys have to ramp up from scratch. Even if they're excellent programmers it's going to take them 6 months to a year to even get comfortable with the code, even with documentation in place. During that time the overall application design will get slightly worse as they try to implement new features in ways that don't fit in with the original application design.

In the mean time you've got 150 other tech companies realizing that people in Brazil will work for peanuts and they'll all move in to the country. Now your programmers are realizing that they can get more peanuts if they do the same sort of job hopping that we did in the 90s to get more peanuts. So over the course of the next year your team is replaced by new people who you have to pay a lot more money to and who are completely unfamiliar with your code base again. So now you're paying your Brazilians as much as you were paying your original programming team and they have no experience with your code base. Good job!

You can only save money that way if you buy into the fallacy that people are pluggable resources and experience counts for nothing. If you believe that then you can get as much done with a summer intern as you can with someone with 20 years of programming experience. Give it a shot sometime. And you can find a company that doesn't have that philosophy. I wouldn't want to work for a company that thinks I'm just a body taking up space anyway.

Re:Let Me Tell You How it Actually Works

[Greyfox]

I don't care how bright you are or how well documented the code base is, for any application more complex than "Hello World" there's inevitably a significant ramp up time for a new person coming into the code. Sure you might be able to sit down and eventually figure out what's happening in the code and even fix it, but someone with experience with that source tree is going to be able to do it much faster than you'd be able to. You're not even going to be completely comfortable with the business logic for several months.

If the project is well documented and well designed you might be looking at 6 months before you really start to notice that you're remembering where a significant number of classes are defined and how they all fit together. If the project is poorly designed and documented then you could be looking at upwards of two years to be entirely comfortable making any changes in it. That doesn't mean you will be completely incapable of doing so in the mean time, it's just that the programmer who's more experienced with that code base, the business logic and the design will do so in a fraction of the time it'll take you. He's also much less likely to introduce bugs that break the business logic or introduce unexpected side effects.

Of course, I don't have any scientific data to back this up. It's just something I've noticed after years in the industry. I used to think you could sit down cold at any project and be instantly productive. And you can, to a degree. But you will never be as productive as the guy who's worked on it for 5 years. And you'll always have that uncomfortable feeling that you don't really know what's going on in the code base for anywhere from a few months to a few years depending on how hideous the code is.

Re:Mismanaged...

[GameMaster]

You may, or may not, feel the need to cry for the IBM employees who are losing their jobs but better people to cry for might be the competent employees in the rest of the IT sector who now have to deal with a flooded job market. As long as they weren't fired for cause, their resumes look just as good as a competent employee's would. Even employed IT workers should be, at least, a little worried as the average pay rate stands to plummet and their higher pay rates become a liability to job security.

-GameMaster

Re:Cringely might be ignoring the long-term...

[Red Flayer]

If we are able to replace US workers for a fraction of the cost, then why aren't consumers able to shop from non-US corporations at a fraction of the cost?

You can. It's called Wal-mart.

The New American Corporate CxO mindset...

[Anonymous Coward]

You can only save money that way if you buy into the fallacy that people are pluggable resources and experience counts for nothing. If you believe that then you can get as much done with a summer intern as you can with someone with 20 years of programming experience. Give it a shot sometime.

But the CxO's of the big American corporations aren't stupid. They know *exactly* just what a house of cards they're building... It's that they just don't care anymore. All they have to do is prop up their company's stock price long enough to fool the shareholders for a short while long enough for their golden parachutes to fill up because they know their days are numbered quite short, and first and foremost on their minds is how to pillage the most from the company for themselves before they're done with it. They are not afraid of Sarbanes-Oxley any more either. Scandals like Enron, Worldcom, Tyco, Arthur Anderson, Global Crossing, and a dozen others in the past half decade have taught the sharks mostly only how not to get caught or how to not get punished if they do get caught.

Re:Sorta...

[Anonymous Coward]

That depends. If IBM is going to keep doing the work (which would seem likely), they're just going to offshore it. Assuming this layoff happens like Cringely predicts, it will (for American IT workers) be like 100,000 workers just appeared with nothing to do. For the offshore workers, on the other hand, it will be like 100,000 jobs worth of work just appeared.

Hm... I have to say that it's quite unlikely that there will be 100,000 people with the right background and skills to do these jobs. It's much more likely that these contracts will be lost and other US companies will pick up the slack with the very same employees that were laid off. I've been to some of the offshore labs where all these "skilled employees" are. Employees? yes. Skilled? only in the most basic sense.

Not all shareholders are super-ultra-rich

[mangu]

offshoring everyone so that a tiny minority of people can go from super-ultra-rich to super-ultra-deluxe-rich

If you think most managers don't deserve the salaries and bonuses they get, fine, I agree with you wholeheartedly. But the article says "The point of this has nothing to do with the work itself and everything to do with the price of IBM shares".

One usually thinks of shareholders as a mixture of Bill Gates, Darl McBride, and Steve Ballmer. Well, think again. I'm a shareholder of many companies and you are one too, if you have a pension fund, life insurance, or almost any form of investment. The point is that when you go to the bank and talk to your manager, your main preoccupation is how much you will get from your investment.

If you worry first about the social impact of the companies that make your pension fund and second about the financial results, well, kudos to you, but most people aren't like that. Maximizing a company's profits doesn't mean just making someone "super-ultra-deluxe-rich", it also means providing a decent retirement to people who have worked their whole lives to get it.

It's a material event. Suqeamish doesn't matter

[winkydink]

If IBM, a publicly traded-company, is planning on laying off 1/2 of it's Global Services division, you can bet your bottom dollar that that's considered a material event and they have to publicly disclose it.

Re:Presumably one would need those heads somewhere

[Anonymous Coward]

My current (Fortune 500) company has 150 software engineers in Bangalore. We have over 50 vacancies we've been trying to fill for 6 months. There just are not any qualified people.

One of my guys just got back from Bangalore on Monday. They had a job fair last weekend, big event, free food, etc. 6 people showed up in 8 hours. None of them passed even a rudimentary technical screening.

There is NO ONE in Bangalore available. Where does IBM think they'll get 150,000 engineers? It ain't gonna happen in Bangalore!

Re:But, but, but. . .

[dedazo]

IBM fires 150,000 people and someone on Slashdot manages to find a "Microsoft sux" angle. Props all around.

Re:Presumably one would need those heads somewhere

[SixFactor]

Definitely interesting that you work for IBM oustourcing, and please, I'm not attacking you, or meaning to be a smart-ass, but what did you just say?

Correct me if I'm wrong, but here's what I *think* you said:

1. If you can farm out a work unit (presumably a task of some sort) to a cheaper (off-shore) resource, you do.

2. But you only do (1) if there is an available off-shore resource.

3. In your view, you're not seeing adequate off-shore available resources that can absorb the workload of 150k U.S. employees to be laid off.

What I can conclude from above is that IBM GS is shedding its U.S. workforce... because IBM GS does not have enough work to occupy its whole (U.S. + off-shore) workforce ? I'm lost.

Of course it's "Americans" that vote.

[Ungrounded Lightning]

Americans get squeamish about massive layoffs, but investors certainly do not.

Yet it's Americans that vote.

It's the start of presidential primary season. The hottest issue among the bloggers in the Republican primary is illegal immigration - mainly its effects on blue-collar unemployment levels and pay scales.

Now we have this - and the issues of outsourcing, H1B legal "guest workers", and their effect on white-collar unemployment levels and pay scales.

How nice that this came up NOW, when it can affect the earliest stages of the election. B-)

I hope they can find enough Indian customers

[Whuffo]

I wonder if they've thought about the size of the Indian market for their services? Each time they send jobs overseas they're also sending the paychecks overseas. Do enough of this and the Americans won't be able to afford their services.

Does anyone at these corporations ever consider that by putting Americans out of work they're shrinking the size of their market? A little temporary boost in profits will be followed by a long term loss...

Re:Mismanaged...

[Usquebaugh]

The problem is that the managers remain. So it happens again and again.

I wonder is the services arm seen as the place you put the duffers in IBM? Keep the skilled workers in other areas but move the dead wood to services?

It's not outsourcing, it's incompetence.

[Futurepower(R)]

It's not outsourcing, it's incompetence. My opinion: If you read the links carefully, you will get the impression that IBM is an incompetent company run by someone with no technical knowledge. Death is normal for an incompetent corporation.

Links: General information: IBM Employee.com.

Cringley: "... the executive ranks from CEO Sam Palmisano on down were losing touch with reality, bidding contracts too low to make a profit then mismanaging them in an attempt to make a profit anyway..."

IBM employee: "They just cut nearly half our team Tuesday, wtihout even notifying the customer (Who is going apeshit). And 40% is indeed the workforce reduction I've heard bandied about." That comment is anonymous, of course. However, that fits with my experience, which is that IBM is an amazingly incompetent company. The incompetence has been there for a LONG time. Remember, IBM lost more than $2 Billion on OS/2, which in the beginning was fundamentally better than the competition from Microsoft.

IBM is run by a technically ignorant CEO: Samuel J. Palmisano is a technically ignorant CEO: "He holds a Bachelor's degree in history..." Note that his official IBM biography carefully avoids mentioning anything that would give a true picture of his incompetence.

I don't think the IBM layoffs are about outsourcing. They seem to be only about incompetence. Only technically ignorant managers contract with IBM, a company run by someone as ignorant as they are.

Also, I don't think outsourcing is working. U.S. companies get an EXTREMELY bad reputation when calls are answered by an under-trained person who can't speak English. Outsourcing is more an abuse of people outside the U.S. by U.S. managers than it is a way to get things done, apparently. Outsourcing call centers is a very effective way to sell customers on the competition, if the competition has competent employees.

Look at the web sites of any online bank. They are stupid, stupid, and purposely stupid. After people in India learn how to write good banking software, magically some company owned by an Indian will have the best banking software.

There is only one reason for outsourcing. Non-technical managers want the technical responsibility as far away from themselves as possible. It is dishonesty only.

Walk down any street in India and ask yourself: Why are people in India so poor? They are poor because their culture is extremely self-defeating. No matter how well an Indian who is first- or second-generation educated is trained technically, he is still guided mostly by his culture.

The claimed cost savings are not there. They simply are not there. The "cost savings" come from situations like this:

1) It is cheaper to hire Indians for a sloppy, poorly defined project than it is to hire people in the U.S. for a sloppy, poorly defined project, and the result is the same.

2) Many top managers today are like kings. They have complete control, can be as destructive as they want to their company and to other people, and are very ignorant. So when it comes time for a technical improvement that will be a lot of work, and require a lot of responsibility and decision-making, moving the entire project 10,000 miles away seems attractive. The distance offers lots of excuses, and it just doesn't matter to the king how much money is wasted. The "cost savings" are what the king says they are.

We are going through a time in which most managers of technically-oriented companies know nothing about technical issues, and don't want to know anything.

Re:IBM and oppressive governments

[Anonymous Coward]

http://www-03.ibm.com/press/us/en/pressrelease/138 8.wss

IBM claims that Hollerith (the IBM germany subsidiary that supplied and serviced the equipment) was taken over by the German government when the war started. If you have proof showing otherwise, please provide it.

And of course, if you have proof showing that employees of IBM today were involved, please provide that too. If not, then please STFU already about it, because if you live in the USA then you too have profited from a genocide in the past.

Re:Offshoring is a new fact of life...

[falconwolf]

But in the brave new world of the neocons, the American middle class has no standing. We're expendable.

It's not just the neocons but the neoliberals as well. Neoliberals have pushed for global trade as much as if not more than neocons.

Falcon

What has the management been doing?

[teh moges]

Seriously, whenever I hear about massive layoffs, the same question pops into my mind:

Why are the employees being punished when this is so obviously a management issue?

If the managers were doing their job correctly, then one of two things would of happened:
1) Either the projects would generate enough revenue to keep the current workforce, or
2) the workforce wouldn't of got "so large" that they need to cull it.

Call it cost saving if you will, but if I were working for IBM and got to keep my job, I wouldn't be turning up Monday. Or any other day for that. If these stories turn out to be true, I'll never buy something from IBM again. If IBM isn't being managed properly, get new managers, not cheaper staff.

I always thought IBM had built its empire on quality and innovation rather then being the cheapest.

I saw this from the backhand side...

[Doctor Memory]

IBM is already profitable, but this is all about boosting share prices short term. I worked for a company that was profitable, but my division wasn't growing as fast as they thought it should be (we were doing 8-12%, they wanted 20%+). So they laid off a bunch of us, waited a quarter for these amazing profits to come in, then sold the division. Any bets IBM Global Services will become the new American arm of TCS, InfoSys or Wipro?

Re:Let's be

[Daishiman]

Whoa, looks like someone's nervous about his job security.

10 p595s with 64 processors and a terabyte of RAM with the latest HMCs and Sharks are nothing to scoff at. We have dev servers running 200 Oracle instances per LPAR and we curiously happen to manage them with a far lower overhead than the guys we replaced. And that's just the start, technologically speaking. Other accounts have Linux clusters with hundreds of nodes, dozens of zSeries, you name it. Our location has one of the largest datacenters in South America. I've been there. The big iron there is impressive by anyone's standards.

You think that simply because we live in some third world country that we somehow lack the technology level first world countries have. It's true that it's much less widespread, but major cities still have dozens of banks, telecoms, and multinationals, and those guys have been using Mainframes and AS/400s since their inception. Hell you can still get excellent jobs here programming in COBOL for banks that keep their legacy code chuggin along as well as the latest J2EE frameworks.

Yes, we sure as hell know that IBM as a corporation is getting much more out of this than we are. Then again, the average salary for an experienced sysadmin has shot up by 25% (mainframe system programmers are getting paid better than most first-line managers nowadays) and we're still very much competitive. Eventually things will balance out, but when they stop improving we'll certainly be in a much better position than we used to be.

Goodbye H1B visas

[Anonymous Coward]

If IBM does the deed then there will be ZERO reason to have any H1B visa people in the US. But of course industry would rather buy an H1B at $40K than pay an American $80K. Attention Bill Gates: This is why Americans no longer major in CS - It won't pay the bills after graduation.