IBM to Lay Off Half of Global Services Division 553
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."
It's been said before but... (Score:1, Interesting)
Mismanaged... (Score:5, Interesting)
But, but, but. . . (Score:4, Interesting)
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?
Cringely might be ignoring the long-term... (Score:5, Interesting)
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).
Re:A fraction of the salary (Score:3, Interesting)
Re:Thanks Cringely (Score:1, Interesting)
Re:Ouch. (Score:4, Interesting)
Yes but... (Score:5, Interesting)
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.
Re:Thanks Cringely (Score:4, Interesting)
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.
Re:But, but, but. . . (Score:3, Interesting)
When I worked at IBM GS, my coworkers included a former kindegarten teacher and a former air traffic controller. Hint - they didn't get more schooling afterward that I know of. It's a good bet that lots of people getting laid off don't count as qualified workers.
Presumably one would need those heads somewhere (Score:5, Interesting)
Re:What the hell *is* IBM Global Services? (Score:4, Interesting)
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.)
Total FT Staffing YE2006 was 356,000 (Score:3, Interesting)
Re:Thanks Cringely (Score:4, Interesting)
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.
Re:Thanks Cringely (Score:4, Interesting)
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.
Re:Thanks Cringely (Score:3, Interesting)
Yeah, Monday. (Score:5, Interesting)
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.)
195,000 H1-B visas are expiring this year (Score:1, Interesting)
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.
Re:Thanks Cringely (Score:5, Interesting)
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.
Let's be (Score:5, Interesting)
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.
Re:Thanks Cringely (Score:2, Interesting)
Who says you're an IBM employee? Anonymous Coward?
Re:Holy Outsourcing, Batman! (Score:3, Interesting)
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.
Re:Thanks Cringely (Score:1, Interesting)
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.
Re:Thanks Cringely (Score:2, Interesting)
Re:Thanks Cringely (Score:3, Interesting)
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 [exmsft.com]
I'm not kidding!
Re:Thanks Cringely (Score:1, Interesting)
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".
Can you do any better? (Score:2, Interesting)
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.
Re:Thanks Cringely (Score:3, Interesting)
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.
Re:It's been said before but... (Score:4, Interesting)
I've often thought how nice it would be if there were laws passed saying that to be registered as a company in the U.S., you have to have X% of your workforce in the country. Or that executives had to be based in the same country as the majority of their workforce. See how interested companies are in outsourcing when it means they have to move to India.
Sun did the same trick a few years ago (Score:3, Interesting)
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.
Re:Thanks Cringely (Score:2, Interesting)
India (Score:5, Interesting)
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 [indiatimes.com] because they can't compeat with all of the heavily subsidized [financialexpress.com] 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!
FalconRe:Thanks Cringely (Score:1, Interesting)
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.
Re:Thanks Cringely (Score:3, Interesting)
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.