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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.
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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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
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.
Well, that rather goes to the core of the problem. And I'd note it's far more than the government contracts: it is the flood of WWII and Vietnam vets who took degrees from the GI bill; it's the education system that this nation built up; it's the industry and work ethic of the people that built the economy that made IBM possible.
But these days, our system is set up to reward those who maximize profit. Outsourcing, layoffs and liquidations are rewarded with bonuses to those who do those thing. Destroying industry, infrastructure and innovation are seen as worthy goals, not as things to be avoided. It's all about short term gain, not about long term sustainability. Throw in the fact that we're destroying our education system, and things look pretty grim.
Unless you change these things, the guy who took the date to the dance is going to find her in the proverbial back alley working tricks every time.
Check your premises.
"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.........
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
The problem is how to you persuade them to honor that debt without completely stomping all over the existing Business environment?
You don't. You can't. Because the existing Business environment is a million MBAs saying "I got mine, screw you!", and fighting tooth and nail the slightest hint that maybe the success of the companies that hired them had something to do with ginormous government outlays in public education, highways, civil courts, property rights enforcement, publicly-funded research, contracts, grants, etc. etc.
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...)
The article is about slashing 78% of US employees at IBM. That's not a sign of a healthy company.
They'll be replaced immediately by employees from India and China.
When I was in China I applied to IBM for data warehouse consulting and got to a third round interview. The hiring manager told me the salary, which was about $1,000USD/month (a pretty good rate in China) but they would send me to the US to work. I pointed out that was below the US minimum wage and she said never mind that because they would send me on a 'Z' visa which is good for up to two years with no salary restrictions. When I then objected I couldn't be sent to the US on any kind of visa as a US citizen, she immediately hung up. I tried to call and email to follow up but couldn't get any response.
So, don't worry about IBM's profitability after they get rid of those pesky US workers and their outrageous salary demands. The going rate on an IBM data warehouse consulting is measured by $hundreds/hour and it's almost all markup straight to the company.
Write to your congresscritter and demand something be done about Z visas.
"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.
Sorry, it was the L visa: inter-company transfer.
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 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.
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.
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.
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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.