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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."
The guys who came up with outsourcing? I hope their jobs were outsourced.
I worked for IBM as a contractor and I'm sure for anyone else who has worked there whether as a full time employee or as a contractor, I am not kidding when I say they are highly mismanaged. I worked as a security engineer responsible for managed firewall services they were doing and I was extremely frustrated at the methods upper management handled things. We'd often spend an hour to two hours over the phone talking about nonsense and waiting for others to join in on the calls. Mind you I worked from home so IBM wasn't spending on me what they did for their normal employees. Whenever I had to head to Southington CT, I would see nothing but waste. I won't be crying for any one of those workers, that's the name of the game, making money. I only wonder why it took so long since this was inevitable anyway.
Infiltrated dot Net
if these people get laid off, won't that mean they can fill some of those supposed jobs that Microsoft et al keep saying they can't fill because there aren't enough qualified workers in the U.S.?
Won't that in turn mean that Microsoft et al won't need as many H-1B visas since some of the positions will be filled?
If Microsoft et al don't attempt to fill their supposed empty positions with some of these people, does that mean they are lying when they say they have all these open positions and no one to fill them and must look overseas for qualified people?
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
Really, this is not surprising at all -- what is surprising is how many US companies are not doing the same thing. If the US were slated to remain the largest market for tech services, then it would make sense to make sure the workforce was largely American.
Now, I'm sure to be modded into oblivion, but I think it's important for tech workers especially to understand that they are likely replacable at a fraction of their cost -- and the more experience under their belt, the more this holds true.
Another thing not mentioned by Cringely is that IBM is also diversifying its employment base. Given the ticking time-bomb that is the US over-leveraged economy, this makes good sense for the long-term security of a company. I'd be shocked if other big international companies aren't thinking along the same lines.
Now, as for Cringely's opinion that this move is just to boost stock price, thereby enriching the current executive group, I think that's only part of the equation. It's easy to blame management greed for decisions that are unpopular amongst the rank-and-file. It's not so easy to understand that the stock market rewards moves like this precisely because they ARE good for the company. Sometimes it's a case of management simply making the best of a very sticky situation, when pain is unavoidable.
All that said, neither I nor Cringely know the full details, and so I'd take what either one of us has to say with a rather large grain of salt (and since I'm an unkown, two rather large grains of salt for me).
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
When I switched from a salaried employee to a contractor, I also got a fraction of my salary. The fraction was 3/2.
There have been some big executives, with 20-25 years experience, leave suddenly in the last 2 months. Good guys most of them. I wonder if they simply do not want to be a part of whats coming.
IBM's customers are large companies... places that buy a dozen mainframes or thousands of cash registers. That's where IBM is loosing money. They won't "cut them loose" but rather rebid the contract with a nice margin of profit (to make up what they lost)... which the customer will readily refuse and go elsewhere. Motto: if you're in an industry against IBM... figure out how to make money from these guys IBM turns lose!!!! Many of these contracts are in the million dollar + range.. that can keep a small shop or consultant fed for years. HP, SUN, linux start recruiting the ex-IBMers for your service/sales departments. Much of what Global Services does is customer facing or back end support. The stuff that SHOULDN'T be outsourced... talking to customers and solving problems!!
That's the publicly announced ~1500 or so, it does not confirm a 40% US workforce layoff. 40% would be a ludicrously desperate move for a company that at worst is described as stagnant, not exactly in trouble. When you aren't announcing any losses, just less-than-awesome gains, it doesn't make sense to just cut out that much in as short a period as a year. IBM is topheavy and I definitely agree that the management is the bulk of the problem (not only *way* too many of them, but they are also more highly paid than the technical people who do real work), and so I wouldn't be surprised if a couple thousand more get screwed over the year, but 40% would be the dumbest thing and I think even shareholders would see it as a detrimental, stupid move.
One problem they do seem to have is startup envy. They see a company come out of nowhere and achieve great fame and a sizable market cap, and wonder why they can't achieve the same percentage growth. The obvious answer (that IBM's market cap is overwhelmingly huge already, nowhere to really go) doesn't seem to occur to them.
XML is like violence. If it doesn't solve the problem, use more.
A huge announcement of these layoffs, followed by similar announcements by other companies in the coming months, would trigger massive sell-offs in the stock market, further exacerbating the economic situation as more capital flows offshore.
If IBM does it quietly, it may cause their stock price to rise a bit, instead of sparking a sell-off as overyone's fears about a collapsed US economy become self-fulfilling.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
Let me first say I work in IBM outsourcing; SO actually. I work with this stuff. Let me also say that whenever wherever we can send a unit of work outside of the US we do that. But, one presumes there are those people 'over there' to do that. One can eliminate 150,000 jobs from IBM but at least some fraction of that, probably a large fraction of it, would have to be employed over in those other places to do that work, one estimates at a fraction of the US cost. And we are not seeing that level of growth over there. Maybe I'm too far removed from it or maybe I'm whistling past the graveyard but I'm not seeing that level of growth overseas.
It sounds like they're just dumping their Unprofitable parts of Services. If that's the case, they might be able to clean up. The Old Contracts and such are still likely to send money to IBM Software, and many of the people who are getting laid off, if they continue to do things in the industry, may continue to do things the way they learned, the IBM way, and keep sending money there as well. (You get to say "I can work with WebSphere!" It's a selling point for yourself that you're not going to just throw away. So your next client runs on WebSphere.)
The World Wide Web is dying. Soon, we shall have only the Internet.
That's from CNN. Also ALL H1B quotas through 2008 have in the US have ALREADY been filled. It would take an act of Congress to change that so clearly any company wishing to drag in more foreign labor can't. They have to send the jobs to them over there.
How about from an IBM employee? As far as I can tell, it's true
This on top of the misleading jobs report released yesterday - which was still under the consensus by 20,000 jobs.
So, will we still be subjected to news stories about the horrible shortage of tech workers in the U.S.? Of course we will - because IBM is laying off well-paid older workers and looking to fill those positions in 6-12 months with cheaper, younger workers.
Hooray for corporate America. The only people getting paid well are the old white guys in the executive suite.
1. Person from our company telling people what to do.
2. Person from our customer that organized the call.
3. Person from IBM that can run a test through web sphere
4. Person from IBM to change the URL in webshpere
5. Person from IBM to change the firewall
6. Person from IBM to change the VPN
IBM has a bunch of people that know how to do one thing, and that is their job. The funny thing is, the people that know how to do their one thing aren't all that good at it. We went through this exercise 3 times. Once for dev, once for staging, and once for production. It took hours to do each time regardless of the fact that we did the exact same thing a week prior in one of the other environments.
I'm sure IBM has some good people, but I'd have to say I'd be swinging the axe too if my company got to this point.
I've worked with IBM contractors... for every one of you that was competent, there were 5 that shot the shit all day, got in late and left early. Hopefully IBM doesn't get rid of too much of the wheat while cleaning out the chaff.
My blog. Good stuff (when I remember to update it). Read it.
Monday
Yup. They spent some huge sum of money to an advertising/PR firm, in order to come up with a name for this new, hot (well, they wanted it to be hot), consulting company. That's what they came up with. "Monday." Like, everybody's least-favorite day. The day you wish was always some other day.
And that's how they got called "IBM Global Services," which doesn't exactly roll off the tongue, but then again, nobody ever says, "sounds like a case of the IBM Global Services."
(Well, actually they might, but that's a different topic.)
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
Wow. That's staggering. What's also interesting is the timing, as the 195,000 H1-B visas that were issued in 2001 are set to expire this year, unless Congress does something. That, by the way, is why all 65,000 H1-B visas were snapped up in one single day, but I digress.
One would think this would put an end to the current attempt to increase the number to 115,000 H1-B's this year, and back up to 195,000 next year. But I suppose that one should never underestimate the power of the right bribe in the right place.
Pardon my paranoid thinking here, but I have to wonder if this is, in part, why IBM is keeping this quiet.
Anyone need a Arcserve / Veritas / Tivoli Storage Administrator ?
On the bright side, there are a lot of people out there who are of the opinion that IBM hardware and software is pretty great (although a bit pricey) but that their consulting stuff is what sucks. So the fact that you have experience with IBM systems isn't a bad resume line at all.
Personally I've always thought that buying PwC was a bad move for IBM, and they should have just consolidated down to their core strengths -- big iron hardware, the AS/400 series, pure research, microchips and processors, and intellectual property.
But still, I'm not sure I believe all this, because Sam Palmisano was a consulting/GS guy, not a hardware-and-systems guy. If anything, I'd expect them to be axing hardware (which is what they're really good at, but I never said I thought they were bright).
At any rate, IBM GS still has a lot of USG contracts, and those can't be outsourced.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
Let's be honest here. I work in Global Services in South America. A lot of the accounts were way overstaffed and the people there were not exactly the best and brightest yet still getting 80K+ a year. I'm not a senior sysadmin by any stretch of imagination, but it can be seen from all 5000 miles away that my American counterparts are in no way superior to many of the seniors that I work with who have 10+ years of experience managing servers in environments where there's less money and you have to be more inventive to solve problems, and who've had to face even more difficult economic situations
Many accounts are overspecialized and action is held back by massive bureaucracy. Despite everything, my pet theory is that IBM simply can't support its massive managerial structure divided by a million differente criteria -accounts, competencies, etc.- , eventually it had to give way.
Who says you're an IBM employee? Anonymous Coward?
If you want news from today, you have to come back tomorrow.
Meanwhile, the Developed Country's worker(s) should be not resting on their laurels but working to improve their value so that they cannot be replaced easily by outsourcing
Talking about Economics, where did the idea of infinitely improvable value come from? In a global (job/skills) market where a man from the USA and a man from India are equally skilled, anything the USian does to "improve his value" the Indian can and will do too - maybe becoming more valuable than the USian.
Jobs aren't being offshored to India and China because Indians and Chinese are more valuable, but simply because they cost less to employ. That situation will continue until the (inevitable) cycle of upward inflationary pressure in their economies (and maybe deflationary pressures in the US and Europe) increases the Indian/Chinese cost of living until those workers cost the same to employ as USians and Europeans.
Then the work will move on. We've seen it all before. One day, they'll be offshoring work to Africa, you wait.
Going apeshit, I presume, does not involve filing a TRO and a lawsuit.
They just found out today. They're having meetings with IBM to try and get it straightened out. I have no idea how it's going to wind up, but the customer is royaly pissed, given there's no way we're going to be able to deliver on our contractual obligations with the staff we're going to be left with at the end of the month. And the customer knows it.
Not to mention if you lay off over 30% of your workforce you have no choice but to announce it as the law requires an announcement.
> i know how to handle this. tell your boss or manager AND/OR IBM to shove it.
Actually I had been in that position (well watching it happen on my old team, I moved before the mess started). Certain US team members dealt with it by using this website.
http://www.exmsft.com/~hanss/badcode.htm
I'm not kidding!
Actually, I recall the % of Americans who are investors is over 50%. They may have jobs and work for a living, but thanks to 401k's and IRA's, investment is pretty high. The number of people who rely on their investments for a living is pretty tiny, and mostly retirees. Even the wealthy usually have jobs, thast how they "build wealth".
If you do not understand why this is necessary then you do not have responsibility for supporting a critical production system with 365x24x7 availability. You can call IBM employees stupid all you want, but I guarantee when you see what the business requirements for a high availability application server are, you will shit your pants.
When production system downtime is measured in tens or hundreds of thousands of dollars per minute, you can bet your ass that moving code through test, staging and production is going to be very slow and very organized. If you know of a better way to ensure 99.999% uptime, then you should patent it and sell it because it will make you a fuckload of money. If not, then perhaps you should just let the adults do the real work and get back to your javascript code monkey job.
Yeah, ditching the cruft when you're worried about your reputation seems like a good business move to me. I just didn't know that IBM had earned a bad one recently.
"Please describe the scientific nature of the 'whammy'" - Agent Scully
Laid off a large bunch of their Professional Services staff here without informing their customers. The customers pulled out the signed contracts asking who was going to fulfill them. By the time the dust settled, Sun had either lost a lot of people to other companies or had to hire the sacked staff back on at higher contract rates to fulfill the obligations.
Slashdot: Where nerds gather to pool their ignorance
I feel you here. If you don't stand up to your boss they will always walk all over you. Last time I told my boss to shove it I got a promotion for being well spoken and assertive. Plus as someone who has been homeless it's bad but it's still better than living in the suburbs.
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.
Tell that to all of the farmers in India committing suicide because they can't compeat with all of the heavily subsidized produce from the US and EU. The same thing happens in South Korea and Mexico. People wonder why so many Mexicans come to the US as "illegal aliens". The reason why is US subsidized agriculture products and NAFTA. Because of the subsidies US agribusinesses can export to Mexico and sale it for less than Mexican farmers can grow the food for. This drives Mexican farmers off their farms and they go north to try to cross the border or they go into Mexican cities and those already in the cities are driven north.
Remember, Time-Warner bought AOL and immediately lost 88 Billion dollars.
WRONG!!! AOL bought Time Warner!
FalconShould there be a Law?
Not to mention the positive effect price inflation and dollar devaluation has on the US economy. What used to be made for pennies on the dollar can no longer be made that way; 33% devaluation over the last 3 years means gap jeans made in some sweatshop cost 33% more to make and ship, and for some companies, those kinds of manufacturing savings will bring them back into the USA. Slow devaluation, over the next decade, will bring a lot of business back into the country. If the dollar devalues 100% from it's 2001 value then we'll see a ton of business come right back. Additionally, it also means things made in America sell better, because the cost of shipping is not factored in. Food, for example, has not kept up with global inflation. Especially organic food, which in the last 5 years alone has nearly halved it's price and most places in the USA have organic food sections. The only problem is that America will then be in competition for global resources and business with a near-dictatorship in government running things which is not good. Then again, the EU, China, Russia, India, and some south American countries are run the same way. Another American Revolution would bring major business into the USA.
Some things make less sense to create overseas, and this means business competition will pick up, globally.
Mostly, the last few decades was a power-move by the banks to get americans indebted up to their eyeballs to create debt-slaves for generations to come, giving the companies ample ability to secure their power. Create a massive price variance with the rest of the world via petrodollars, drug trade and manufacturing trade, get everyone used to a high standard of living. Then dump sectors of the economy, one by one, forcing people into debt during those hard times. Then just make the hard times last long enough. The housing bubble is one such example; how many Americans are in so much debt, working a $60,000 a year job, that they can't buy food? It's a power game and if you know how to take advantage of it, it don't work for them anymore.
Problem is, the mexicans that come over the boarder live 6-10 to a house, make a combined income of $60,000-200,000 a year, and do things like send eachother to college, buy eachother cars, and other things. Some of the mexicans I know are awesome and I teach them all kinds of things. I know a family next to me with 4 kids, the mother and father are waiters and they sent their oldest to college on their cash and the cash of 2 of their kids who worked part time jobs while in school. She came back with an architectural degree, got a good job for something like $50,000 a year, then sent 2 of the other kids to school. They finished and sent the last one to school. The parents are taken care of well. The point is, if you do it like that, you operate outside of their system; financial security is yours.
I do not know how to do just one thing, I am not an older worker. I am young (32 years old), but have spent 10 years with the company.
... I've been a software developer for twenty-seven years (started my own consulting business when I was twenty), doing software for the manufacturing sector, with a minor sideline in video games. So now, after all that time, all that experience in product design, management and implementation, I find that my country doesn't see me (and those like me) as anything but a cheap commodity. Too many Palmisano's and Fiorina's have devalued thousands upon thousands of talented engineers and technical people of all kinds, the very people that we need to maintain our industrial base and the high standard of living that came along with it.
... do that, and don't look back. And good luck, whatever happens.
I have news for you: thirty-two qualifies as an "older worker" in the modern world (not that I'm saying 32 is old!) However, ten years experience? You're no newbie: that's a substantial work history, my friend. It's worthy of a decent salary, much more than they would have to pay for an outsourced worker or a recent graduate. It's much more than the cheap bastards that run today's companies want to pay for. If I was still running my old consulting business and you were working for me, I would expect to pay you what you were worth, and I would expect you to make that money back for me and then some. That's how the game is supposed to be played.
The problem is that experience is simply not valued by American corporations anymore. It just isn't, and that really is the crux of the matter. If you do value the accumulated knowledge and wisdom of your employees, you come to the realization that paying them what they're worth is, in fact, worth every penny. That's because they are that which makes your company valuable. It's not the buildings, the furniture, the physical plant: it's the people. But you have to have a degree of foresight to understand that, and maybe an awareness of history, and both are in short supply nowadays.
Take me
At some point I guess I'll have to become a manager, or go back into business for myself. Personally, I find the latter option more appealing: even middle management isn't safe from layoffs anymore, and frankly I'd rather be bossing computers around than telling people what to do. But that's just me. Maybe when I get old enough and lose my edge I'll try management, but for now I like coding too much.
Oh well, I will take my severance and run and get the hell away from this sinking ship as fast as I can.
The higher the technology, the sharper that two-edged sword.