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Cringely Predicts IBM Will Shed 78% of US Employees By 2015
Third Position writes "Cringely with more predictions about IBM: 'The direct impetus for this column is IBM's internal plan to grow earnings-per-share (EPS) to $20 by 2015. The primary method for accomplishing this feat, according to the plan, will be by reducing U.S. employee head count by 78 percent in that time frame.' So far, Cringely's pronouncements about IBM have been approximately true, even if he missed the exact numbers and timeframes. Is he right this time?"
The IBM building across the road from the lab I work at here in Winnipeg just had a "For Lease" sign go up yesterday.
Trolling is a art,
Because nobody thinks this stuff through, teaching it at business school or not.
Everybody tries to appease the "stock market" because it's "increasing shareholder value" (Don't you mean shareseller value, guys? Let's be honest here- since there's no real way to obtain value through dividends, etc. you have to sell it off to some bagholder at some point or short it to them...)
I am not merely a "consumer" or a "taxpayer". I am a Citizen of the State of Texas
No... Wrong answer from start to finish. You can still have issues with tight specs, paying well, etc.
Prime example: Bindeez/AquaDots. In this instance the toy manufacturer had explicitly specified 1,5-pentanediol as the plasticizer, a relatively safe, non-toxic, chemical. The Shenzen based offshore manufacturer substituted 1,4-butanediol, a much cheaper plasticizer compound that has similar characteristics, but is **NOT** safe or non-toxic. 1,4-butanediol converts to GHB in the gut through the enzymatic processes there. GHB is a dangerous date-rape drug. Why did they subsitute it? Because 1,4-butanediol is VASTLY cheaper than 1,5-pentanediol and they didn't connect the dots (no pun intended) that they were making a bad choice- and they did it to increase their margins, didn't think anyone would notice the change, and quite simply DID NOT CARE.
What you're saying may be the case, but this was one of those "high-end" bunches that DID that. Sorry, not buying your line for a moment because it still happens often and there's little concern by the people over there running the businesses over the sorts of impacts of decisions like this. Not even with companies like Foxconn.
I am not merely a "consumer" or a "taxpayer". I am a Citizen of the State of Texas
I'll let everyone in on a little secret. IBM is getting rid of most of its software developers because it wants to get out of the software development business. The reason is because they, for a variety of reasons, produce mediocre software, and the executives know it.
IBM's strength is its sales channels. It can command high prices for it's software because it is a trusted brand, and it's very good at strong-arming customers into purchasing expensive complicated solutions once they get their foot in the door.
IBM's new software business model is as follows....
1) Find holes in their "portfolio" for providing end-to-end solutions for customers.
2) Purchase existing companies where that software is already implemented (e.g. Rational, ILOG, Green Hat, Cognos, Buildforge, Telelogic, etc...)
3) Sell said software at much higher prices than the original company could have ever gotten away with.
4) Reduce headcount by eliminating developers from purchased company, replacing them with offshore developers whose only purpose is to "maintain" the newly acquired software. Also, eliminate less-profitable niche products and lay off those developers except for the cream of the crop.
5) Reap huge profits.
6) Repeat.
Check out the list of companies they've acquired...
http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_IBM#Acquisitions_since_1999
So don't think that the executives at IBM are idiots. They're not. They've found a way to squeeze tons of profits from existing software companies. They have no reason to care about employee morale. They don't need developers. They've got too many as it is from all of these acquired companies. Bad morale means employees will leave on their own, meaning they don't have to pay severance.
Also, IBM typically purchases companies for a handful of their product line. That leaves lots of smaller software products that IBM simply has no use for (not a large enough market, duplication of product lines, etc...). Often, "rebalancing" means chopping these products out of existence. IBM has literally THOUSANDS of these small niche products that it wants to eliminate.
So for developers, it sucks, because the IBM executives have no need for you anymore. There's no reason for IBM to produce its own software anymore. Why risk starting development on a complex product when you can just purchase the finished product? You're nothing more than a "resource" that they have too much of and which needs to be reduced through "resource actions".
But for executives and shareholders, it's a wonderful arrangement. Don't be fooled....IBM can be profitable doing this for a very long time. Please keep in mind that IBM reducing US headcount from 130k to 90k is misleading. That number does not include the huge number of employees that they've absorbed through acquisitions. They've laid off many more than 40k US employees, and they have no reason to stop now.