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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?"
We need to make the company more profitable. Lets put out a quality product everyone will need to have.....ehh fuck it thats too hard, get HR on the line.
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,
This is just one of a series of articles he's releasing this week. Two of them are currently available on his site.
The Cringely prediction cited as being "approximately true" (http://www.pbs.org/cringely/pulpit/2007/pulpit_20070504_002027.html) was nothing of the sort. Cringely predicted IBM would imminently lay off 150,000 employees. That was five years. Didn't happen.
cognos is the worst piece of crap software i've had the pleasure of working with. it's a huge pain in the a$$ to install, you have to make dozens of changes that isn't in the documentation and only available by calling support. even then they tell you to google stuff because the IBM support site is a mess to navigate
and after you buy the software you find out features are missing because you didn't buy the right version. there are like 20 different versions of Cognos with different features
SQL Server may not be 100% as good, but at least it's pretty easy to set it up and get going for the 90% of the features you will use
What kind of predictions does he get right? Software will crash and Google will be the new Microsoft and Microsoft will be the new IBM.
http://www.cringely.com/tag/2011-predictions/
IBM stands for "I've Been Moved" (Except now it's your *job* that's been moved, and you will probably not move with it...)
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Phone support with trained professionals who can get the job done fast to impersonal IM with barely bilingual, questionable quality support techs on the other side of the planet. Rates are more or less the same (I'm being generous). What could POSSIBLY go wrong with that? That's like putting a Ford Mustang body on a low end Tata car and wondering why customers flee from it.
That's what this means. When they got out of the PC business they just sold it to china. And now they're apparently doing the same thing with their research division.
Companies don't survive that. The logo might survive. But it will be hollowed out mask.
Oh well. Ironic that this was once the company said to be an unbeatable monopoly.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
Several years ago somebody put out a joke press release that went something like:
Dear Employees,
We have calculated that reducing the workforce by 10% would result in a savings of $100 Million. Taking those calculations further, we have determined that eliminating 100% of the workforce would result in a savings of $1 Billion. Because we are committed to driving maximum shareholder value, we are announcing that we will be eliminating 110% of the workforce. The additional cuts will be achieved by laying off employees of other companies.
When questioned if laying off 100% of the workforce would cause the company to no longer exist, the CEO replied "Nobody has ever tried this before, so let's not be too hasty to jump to conclusions".
In the USA, many of the obligations to employers come from government-enforced responsible behavior. We want equal treatment of women, minorities and LGBT people; employee rights and regulation; health and safety standards; environmental pollution limitation; a complete tax system; counseling for employees who need it and so on.
Other countries don't (yet) have these, so their costs are most lower.
If the consumers start being willing to pay extra money for products designed and built according to our standards here in the USA, maybe we will see IBM and others stop this outflow of labor. However, if the consumers compete mostly on price, that won't be the case.
I'm fairly Right Wing and just uttering those words makes me feel queasy.
But I have to say that when it comes to U.S. chartered companies outsourcing the majority of their employees and work over seas, I have a problem.
Despite Globalization, I believe there is still something to be said for "dancing with the one who brung ya". At the very least, these companies have benefited from the U.S Legal and industrial infrastructure. I'm not saying that the Feds made IBM possible, but it was a symbiotic relationship that grew over time. The U.S. (Feds, state and private) is a BIG customer and As such, I think a reasonable person can say that IBM and other large U.S. companies "owe" something to the U.S. and its workers.
The problem is how to you persuade them to honor that debt without completely stomping all over the existing Business environment?
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
Mainly because his predictions provide insight into a strategy, a situation, or a problem that does exist. Even when he's wrong, you learn something. There are very few people in the industry that are as well connected as he is.
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True that America does not hold a monopoly on quality products - see Germany - but China has a long way to go. China can build things cheaply but unless they have strict Quality Controls and Oversight, their products are invariable crap. You see it time and time again companies that have poor Quality Control end up having crap products.
This certainly puts the recruitment message from an IBM recruiter I got on LinkedIn last week in a new light.
Impossible. That would mean they would have to get rid of some *managers* too! Sorry, that ain't gonna happen. People with actual knowledge, sure. R&D, perhaps. But firing MANAGERS?? No way! Someone has to fill all the procedures and spreadsheet targets, ya know..
To Terminate, or not to Terminate, that's the question - SCSIROB
They are selling their point of sales machines to Toshiba. They want to become software and service only.
There are two major products that come out of Berkeley: LSD and BSD. We don't believe this to be a coincidence.
Time for a IT union so they can't pull carp like this!
their point of sales machines constitute 78 percent of US staff? Really?
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
No, this is a boldface lie (well, it was a lie about being a lie)
his was a baldface lie.
"If you have nothing to hide, you have nothing to fear." - Every fascist, ever
This country needs a crash program to train circus lions to eat CEOs and boardmembers.
the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff
What? Most companies doing this outsourcing don't realize it's not an apples-to-apples tradeoff. One of the core issues is that IT education in India is different than in the U.S. In India they spend much of their time on the technical aspects of a broad range of languages and platforms, but that training lacks the depth and the thought training that universities in the U.S. use in their curriculums. That shifts the burden of design and management from the average U.S. CS degreed developer who can do it all, to a tiered project structure where you have to insert a layer of project leads to manage the to-do lists for the outsourced developers.
So we have layers are added by necessity, process time is increased as a result, and in an industry where timing is everything, that short term cost savings is negated by the lost opportunities. Let's not forget that adding one more layer of indirection between the developers and the product owners just gives the developers a lesser feeling of ownership and they have less reason to stick around. In an industry that takes wokers 6 months to come up to speed, and high aquisition costs to find replace them, the costs continue to mount for any outsourcing effort.
What article is dated 2007? The article in the first link provided in the aummary is from this month. It references a previous writing from 2007.
When all that remains in the US of our technical industry is management, it will be only a matter of months before we lose that as well.
Check your premises.
Maybe it's just their way of saying there is no more future left in their industry, they don't believe the can compete and are slowly shutting down? So what? businesses do this all of the time. This is just a way of soaking up as much money on the way out as opposed to eventual bankruptcy.
Or maybe it's there way of saying there is little future left in the US. Maybe Brazil / India / China / etc. are the growth centers they're banking on. Maybe then it makes lots of sense to 'outsource' those functions.
To the people who will be paying for them.
There are companies that look beyond the next quarter. IBM tends to be one of them.
Faster! Faster! Faster would be better!
"How dare women demand to be paid the same money as men for doing the same job"
Women do get paid as much as men; once actual hours worked, time off for family, medical time off, vacation, and types of jobs (men work more dangerous, higher paying jobs) are factored in. In large blue cities (like New York) women are now making more then men.
If that is the case, why doesn't the US just cut corporate tax to 0%....for companies IN the US doing work with US workers?
That would attract businesses by the droves I'd think...so, no loopholes, no corporate taxes...
Wouldn't that mean more companies wanting to come to the US to do their work? The US would make up the money on more people working...and for sales of more products/services.
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
No not exactly shed jobs, but the focus will be on hiring in the developing countries as IBM see's more demand from those areas and that the U.S is a well saturated matured market. this is the 2015 plan they do have and have had for almost 7 years.
When I started with IBM in 1999 they had ~220k US employees. At the beginning of 2009 they had ~115K. That year they had two rounds of lay offs that included ~5K per round. IBM stopped publishing the number of US employees after that for some reason.
- I got hit in that second round
Q4 2011 was IBM's most profitable in it's 100 year history.
You're just making stuff up.
Bad analogies are like waxing a monkey with a rainbow.
You get crap from them because the parent companies pay crap. They will build to any spec you want as long as you pay for it. It's just most companies choose to build to a lower spec - because they can.
In the fashion industry, for example, Chinese manufacturers are now considered "high-end". Go to boutique stores, and you will now only find Chinese-made clothing for the $100+ market. Anything below has been out-outsourced to Vietnam, Cambodia, and Indonesia.
There are a huge number of yeast infections in this county. Probably because we're downriver from the bread factory.
They forgot the rest of the headline.
Please do not read this sig. Thank you.
Cognos came via an acquisition from what i understand and is not an IBM original. But i agree it is a convoluted mess. Thankfully i still get to use Crystal reports. ( and have since they were independent )
---- Booth was a patriot ----
Boomers? No. Financial theorists of the late 1970's/early 1980's? Yes. That's roughly when the concept of "maximizing shareholder value" started to get taught in business school. (I was there, I know. Big name east coast B school - it was on all my professors' lips.)
It was BS then, it's BS now - it misses the basic fact that a corporation has three constituencies, not one - customers, employees, and yes, shareholders. Take care of the first two, and the third will do just fine, thank you very much. Pay your employees what they are worth, give your customers what they pay for, focus on delivery and not empty marketing, and the value of your business (and hence your shareholders' worth) will grow accordingly.
It takes thinking past this quarter's results. Under pressure from investors and analysts, that's hard to do - so hard, I think just about the single worst thing a successful company can do is go public. (Looking at you, Facebook...)
Man, where's my FUNNY mod points?
Peter predicted that you would "deliberately forget" creation 2000 years ago...
"Shareseller value": noun; the real reason people buy shares, which is to sell them at a profit; opposite of "shareholder value", which is the diminishing value of shares held by someone who has been duped into believing that investing in the stock market will make his or her retirement pecunious.
Rich And Stupid is not so bad as Working For Rich And Stupid.
Invariable? How about just "inconsistent"?
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
if by "managers" you mean "executives", then you may have a point. However, I'm pretty sure that low-level managers are affected by these layoffs.
In my experience, it's more about the outsourcing strategy of work goes to the lowest bidder. The good teams in China/India are priced out of the market of most companies looking to outsource. The same is true in the US, but US executives I don't think have a real intuitive grasp on the cost of living implications and thus fail to recognize a too-cheap chinese bidder as too good to be true. When faced with a competitive US outsourcing bidder, they may sense something wrong and is more likely to figure out that the 'company' is some guy in a basement with maybe a cousin or something helping him.
XML is like violence. If it doesn't solve the problem, use more.
IBM has never been a particular friend of America, at least as far back as the time it provided the Nazis with computational equipment to keep track of their concentration camps.
(And no, before you start calling bullshit, that is not controversial at all. It *IS* a matter of historical record. There are even documents that prove Watson himself knew what was going on.)
Why should we expect a company that started out with a "profit above all else" attitude to have changed?
Boomers? No. Financial theorists of the late 1970's/early 1980's? Yes. That's roughly when the concept of "maximizing shareholder value" started to get taught in business school. (I was there, I know. Big name east coast B school - it was on all my professors' lips.)
It was BS then, it's BS now - it misses the basic fact that a corporation has three constituencies, not one - customers, employees, and yes, shareholders. Take care of the first two, and the third will do just fine, thank you very much. Pay your employees what they are worth, give your customers what they pay for, focus on delivery and not empty marketing, and the value of your business (and hence your shareholders' worth) will grow accordingly.
It takes thinking past this quarter's results. Under pressure from investors and analysts, that's hard to do - so hard, I think just about the single worst thing a successful company can do is go public. (Looking at you, Facebook...)
Yeah, financial theorists are part of it, but it still takes a gullible, apathetic public to allow the actual polcies to be implemented. Truth is, the policies are doing exactly what they were intended to do; bankrupt the government by putting it so deeply in debt, there would be no way to provide any social services, corporate oversight, regulation, etc. That's not even to mention the *huge* corporate propaganda campaigns teaching people to hate their government and hate anything resembling social welfare. It's all working out great...for corporations. Now, who allowed that to happen? The public. Who voted back then? The fucking boomers.
They wont post US headcount, but they're more than happy to boast about foreign headcount.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
If the goal is to keep stockholders happy over a short period of time, huge layoffs work well. Unfortunately, it's an easy way to make a company irrelevant. It's usually accomplished by reorganizing sales and marketing mostly for appearance, while cutting deeply into engineering and service. This produces an agile, high performing sales force, lower operating costs, and higher profits over the short term. And then next year the company realizes they have nothing new in the pipeline, and restarting product development is prohibitively costly. Customers who observe the downward spiral start to bail, as well as customers who are tired of calling service and getting routed to a clerk in Kharsingi. And in a few years, the company exists as an answer on Jeopardy. One of the cheap ones.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
IBM has a very clever strategy for silently reducing headcount.
Each year, beginning in January, IBM does this:
1: identify unprofitable projects to cut (there are a ton of them at IBM)
2: SILENTLY implement a division-wide hiring freeze. Only directors and above are told. Lower-level managers, oblivious to the freeze, keep right on interviewing candidates for open reqs (there are a ton of those too). Because of the freeze, a request to hire will be rejected.
3: inform workers on doomed projects that some will stay to transition the project to India, the rest have 1 month to find another position. Or else... Then hand out a list of open IBM reqs. No details are given about what will happen to you if you haven't found a new job by the deadline.
4: Wait for the nervous employees to discover that there are only a few "real" reqs. Mostly undesirable jobs in sales, support, sales support, etc. that often require a pay-cut.
5: The nervous employees panic, start interviewing outside, find jobs outside IBM, and quit.
6: when the 1-month deadline arrives, those that haven't quit are magically given jobs.
The net effect is that many employees leave IBM willingly rather than wait until the deadline to see what happens.
No layoff packages, no reports to the state, no media coverage.
And a few low-level support jobs are filled with desperate engineers.
Layoffs give a company like IBM a black eye. They also lead to legal expenses.
IBM doesn't hate pressuring or frightening people into quitting though!
The expression they use is "Managing people out of the company."
Having left IBM 1 year ago, I can tell you that there is definitely (a good) life outside of IBM.
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.
One generation more of tech people and if you ask them who is IBM they will have go search in Wikipedia to know what that company is or was in the future. How could a company lost brand name so fast. Now instead of having IBM stores (and app stores) have only Apple stores. Apple shows that hardware is profitable not only in profits but also in brand recognition. What is not profitable is bad management. Fortunately HP realized it before too late.
Also try to navigate IBM support web pages is a nightmare. Cannot find anything. The quality of information for IBM acquired software is terrible: Rational, telelogic, etc. Better let the former company support team manage support.
When company profits depends n shedding people, it takes not long until it goes toast.
I always find it amusing when the proles point out that the higher ups never get the axe. There's never any indignation, just the same blind faith that the invisible hand will mete out justice. Newsflash: these guys have tanked our economy every 5 to 10 years since 1970 and they seem to be doing just fine.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
Services, while they don't entirely depend on having people in the US, depend at least in part in having many people in the US or some equally expensive English speaking place.
There is no doubt - for most of what IBM is selling, APAC and the Middle East are the growth markets. So it does make sense to move centers of business from the country with low single digit growth and a saturated market to the developing areas with strong growth and lots of greenspace
On the other hand, there's clearly a lot of outsourcing fever going on, and IBM may be participating in that but couching it in the "International" part of its namesake. It's hard to say.
For one thing few if any Fortune 50 companies could ever grow that fast internally. IBM has been on an acquisition spree and will continue to grow by buying out smaller and not so smaller companies. Those companies once acquired may see appreciable staffing growth though but internally IBM's core staffing won't drop by much.
and pro-worker regulation (incl. unions) is usually the role of Fascists.
Between the unsurpassed waste of the private health insurance industry and an overblown consumer culture, I don't see where you get off blaming women, minorities and LGBT people. The labor movement may share some of the blame, but mainly because it made a consumer culture possible. In today's environment with unions' insignificant share of the workforce (and little if any threat of unionization), jobs are still being frenetically off-shored.
The main reason is the cost associated with entrenched economic backwardness. Americans put up with it because we are saturated by bread and circuses; copious availability of cheap, fattening food and mind-numbing media. None of these maladies revolve around identity politics, though I would say that the identity group with the most to learn is the one you didn't mention.
While I agree the laws could be better-written, the goals of having equality and justice are part of who we are as a nation. It's a choice we have made and it enhances our quality of life to have this. Other nations are struggling to do the same, because in their view what we have done is a better way of life.
Cringely also is not a single entity but a conglomeration of various writers over the years ;-)
Is that your guess, or have they actually found such things with rigorous studies? I've known about the "types of jobs" issue, as women are more likely to work retail and men are more likely to work car sales, and car salesmen are one of the highest paid "sales" and retail one of the lowest. But for medical time off and such, is there enough data to support this? The latest I'd heard, the largest single difference is that men are willing to ask for more money and more likely to shop jobs if their pay isn't what they want/expect. Women are less likely to ask about pay, and less inclined to shop jobs because of it, which isn't in any of the factors you mentioned.
Learn to love Alaska
There have been a number of studies, and many articles, discussing this issue. You can Google as many as you care to read. I'll provide a link to a WSJ article discussing it today: Why Women Make Less
The article discusses the hours-worked issue extensively. It doesn't go into detail about the fewer hours worked other than to say it's mostly due to children, but other articles that break this "children/family" category down find it's due to a number of the variables I mentioned. The article also discusses the trend where women are starting to become the "richer sex".
Thus, if you don't consume that product, you don't pay those taxes.
Basically it's another form of sales tax.