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."
Thanks Cringely (Score:4, Insightful)
Re:Thanks Cringely (Score:5, Funny)
Dvorak could say anything... (Score:5, Funny)
Unless he has already written that article this month. In which case, the probability drops to 40%.
It's not outsourcing, it's incompetence. (Score:3, Insightful)
Links: General information: IBM Employee.com [ibmemployee.com].
Cringley [pbs.org]: "... the executive ranks from CEO Sam Palmisano on down were losing touch with reality, bidding contracts too low to make a profit then mismanaging them in an attempt to make a profit anyway..."
IBM employe [slashdot.org]
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:5, Informative)
How about from an IBM employee? As far as I can tell, it's true. They just cut nearly half our team Tuesday, wtihout even notifying the customer (Who is going apeshit). And 40% is indeed the workforce reduction I've heard bandied about.
And I think Cringely has it right - this is largely being driven by Palmasano panicing over the stock price. It's barely moved since he's been CEO.
Re:Thanks Cringely (Score:5, Insightful)
Re:Thanks Cringely (Score:5, Insightful)
Re:Thanks Cringely (Score:5, Insightful)
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But in the brave new world of the neocons, the American middle class has no standing. We're expendable.
It's not just the neocons but the neoliberals as well. Neoliberals have pushed for global trade as much as if not more than neocons.
FalconRe:Thanks Cringely (Score:5, Insightful)
The most important part of what you just said is that it doesn't take long for people to realize how screwed up the mass layoff was, and then a good portion of that 40% gets reabsorbed back into the machine. So people are worrying that these people will saturate "the market" but in all likelihood, firing half your workforce does absolutely nothing to teach you how to be 40% more efficient. Which means unless some radical transformation in management occurs (and as you just pointed out that's extremely unlikely), IBM will be just as inefficient before but now making 40% less of their customers happy and earning 40% less revenue, which means they'll go, "Oh, shit!" and have a mass hiring in short order.
As far as market saturation while they figure that out, you'd really need to take a look at the qualifications of these people and what work they are suited to as far as where they can realistically go to fill a job (where the employer agrees on their credential and pay level and so do they). Then maybe we could talk about the short-term impact of a glut of IT workers in those particular areas of IT, but again I predict it is just a transitory thing. And I suspect what some other people said is just exactly right. The perceived move to increase efficiency will drive up the stock in the short-term, some bigwigs will cash out, and then the reality of my first paragraph will set in and things will return to (normal - a couple hundred million in bigwig pockets).
And of course, flooding a market temporarily drives average salaries down, which means you can rehire your people at a 15% discount and thus you see just how it works. 100K employees * 15% ($50K median salary at time of layoff) * 1.5 year rehire loop = 1.125 billion dollars. If upper management did their homework, the revenue lost over the period is offset by the short-term float of the stock on investor optimism about the reorganization and there you go: about a billion dollars to spread around to the high rollers as they make a graceless exit, fat wallet in tow.
Digustingly clear isn't it?Re:Thanks Cringely (Score:5, Insightful)
Each time you downsize, you cut a disproportionate quantity of productive employees. Think of it as a crash diet; you waste muscle and increase the percentage of fat. This is why crash dieting is a good predictor of future obesity. It's also why companies that go through this binge/purge cycle become less and less competitive with each cycle. Look at Ford, GM, and Chrysler. How many times have they done this? My, now there's a success story...
Agreed. But Instead, they have $100k lunches: (Score:4, Informative)
(scroll down, or search for IBM)
I guess they could be buying it with their own money, but still, that's just bad PR in the middle of layoffs. a$$holes.
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.
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Re:Thanks Cringely (Score:5, Informative)
I just wish people would do an absolute minimum amount of fact checking before they spread this kind of, quite frankly, garbage.
Firstly - I have no doubt IBM is laying off a lot of people, there is probably a need to in some areas. Layoffs are part of running any business. Some times a lot of layoffs will happen too. Trying just a little bit of basic maths first would be appropriate however. The numbers in this article are absurd.
As far as I know IBM has around 320 000 employees world wide and some 120 or so in the US. The layoffs this article are talking about are in the US, and they are only within the IGS part of IBM. IGS doesn't account for more than half of IBMs employees in the US, at an absolute maximum. That means that if you lay off the entire IGS division, you'd lay off some 50-60 thousand people. Where Bob gets the other 100 000 from is anyones guess. Perhaps they are laying off people in India and outsourcing those to China, and they are laying off people in China to outsource them to Poland.
Sadly sensationalism is more important than basic fact checking. The state of our current journalists is really, really sad. Cringely is at the very bottom of the heaping pile of dung that they call journalists today. Cringely is useful for little else than pirana food. Sadly I think that feeding Cringely to pirana would be cruel and unusual punishment, for the pirana.
Re:Thanks Cringely (Score:5, Insightful)
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Re:Thanks Cringely (Score:5, Insightful)
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:Thanks Cringely (Score:4, Insightful)
This does at least insulate us from the rising cost of oil for the time being, since oil is traded in US$, and US$ is falling almost as fast as the price of oil is rising.
Re:Thanks Cringely (Score:5, Insightful)
If oil comes off the dollar, the US is even more screwed, since petrodollars will stop coming into the US, and other nations will have less reason to hold USD. Furthermore, there will be less incentive for countries like Korea, China, and Japan to buy T-Bills (which they currently do for a *negative* return once dollar depreciation is factored in) -- which results in them selling them off, which then causes the dollar to drop further.
All in all, there are several major factors currently propping up the USD, and if any one of them were to fail, it's likely the others would follow, resulting in economic disaster for the US, with much of the world to follow.
Note that depreciation of the dollar is a positive for USD debt servicing, which is a major reason why it's been allowed to continue. As soon as the US is forced to take it's debt in other currencies, however (which will likely be around when oil comes off the USD), then the US is in a world of pain.
As for me, I'm contributing to the problem by investing most of my money overseas -- but I can't accept the risk to my long-term investments by having them here in the US.
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The value of US Bonds is dependent on the interest rate given on them. In addition, expectations of a weakening dollar reduces the values of US Bonds. US Bonds have the highest rating becaue the US hasn't welched yet, but the rating of the bond is only one factor in its value.
Re:Thanks Cringely (Score:5, Insightful)
Re:Thanks Cringely (Score:5, Insightful)
That's because "Americans" actually have jobs and work for a living, and are concerned that their job may be next on the chopping block, and "investors" can just shuffle their money from one investment to another without that concern.
Of course it's "Americans" that vote. (Score:3, Insightful)
Yet it's Americans that vote.
It's the start of presidential primary season. The hottest issue among the bloggers in the Republican primary is illegal immigration - mainly its effects on blue-collar unemployment levels and pay scales.
Now we have this - and the issues of outsourcing, H1B legal "guest workers", and their effect on white-collar unemployment levels and pay scales.
How nice that this came up NOW, when it can affect the
It's a material event. Suqeamish doesn't matter (Score:5, Insightful)
Re:Thanks Cringely (Score:5, Informative)
Re: Bad PR (Score:3, Informative)
(near the bottom of the story)
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I saw this from the backhand side... (Score:3, Insightful)
Re:Thanks Cringely (Score:5, Informative)
IBM has also implemented LEAN in effort to cut their IBM'er workforce in response to offshore outsourcing, which ironically is the very thing they're doing themselves. The survivors, although being survivors might mean they sorta wished they weren't. It's seriously bad. I'd suggest not touching IBM with a 10 foot pole. They're calling this the wave of the future... if they want to turn IT into something equated as fast food. That's the dream they're going for.
Check out http://www.ibmemployee.com/ [ibmemployee.com] . They have more news on the matter.
The sad part about the whole thing is that I enabled this to happen. I've spent my time there since day one migrating dying backup environments from Veritas Backup Exec and ArcServe IT to TSM and the resulting clean-up work. I am massively disappointed.
Anyone need a Arcserve / Veritas / Tivoli Storage Administrator ?
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.
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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.
That's very possibly the main reason to do such a thing. It's been a while since I've worked with ex-IBMers, but all the ones I met were very, very good at their job. And not just at one thing. Of course, those were the consultants. Your comment about IBM using too many people is probably noteworthy too, but they've always used too many people.
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.
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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 ru
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Re:Thanks Cringely (Score:5, Insightful)
i know how to handle this. tell your boss or manager AND/OR IBM to shove it. tell them you WILL NOT train the very person who is going to replace your job for the sheer means of satisfying the stockholders. if they want the cheap labor that bad, then let them figure out how to train them and pay for them to be trained themselves.. and try to do that from 5,000+ miles away. then let's see how they feel about offshoring.
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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!
That's a thought (Score:5, Funny)
I spent rwo weeks training my replacment how to write USB firmware...it's a shame we didn't do that.
100-150k layoffs? No way. (Score:5, Informative)
I see you're a contractor systems administrator. I'm sorry you won't be able to come on as a full-timer, but your post seems to be a serious case of sour grapes. I mean...part of being a contractor is that your job is not guaranteed.
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.
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If it did, it would be crushed by plutocratic capitalism.
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.
Where's your god now (Score:3, Funny)
Mismanaged... (Score:5, Interesting)
Re:Mismanaged... (Score:5, Insightful)
-GameMaster
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I wonder is the services arm seen as the place you put the duffers in IBM? Keep the skilled workers in other areas but move the dead wood to services?
What the hell *is* IBM Global Services? (Score:2, Insightful)
Re:What the hell *is* IBM Global Services? (Score:5, Funny)
Re:What the hell *is* IBM Global Services? (Score:5, Informative)
It's IBM's consulting division.
In a nutshell, it's all of IBM except the parts with which you're probably familiar from the Good Old Days; it's all the business consulting, management consulting, logistics, etc.
What it's not is the remaining parts of IBM hardware; the AS/400 division, the mainframe division, software division (Lotus) etc.
I think Cringlely is dead wrong on all this -- in the past few years it's been Global Services and software that are really hauling everything else along. I think Hardware would probably survive on its own, as long as they could keep the IBM marque, but the money is in the service crap.
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.)
Re:What the hell *is* IBM Global Services? (Score:5, Funny)
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Re:What the hell *is* IBM Global Services? (Score:5, Informative)
They do IT consulting, and make up one of the "Big Four", along with Accenture, BearingPoint (formerly KPMG Consulting) and Deloitte Consulting.
IBM Global Services is essentially the artist formerly known as PwC Consulting (which IBM purchased). PwC Consulting was formerly the consulting arm of PriceWaterhouse Coopers, and was spun off in 2002 in response to the Enron/WorldCom/Arthur Andersen messes & the introduction of the Sarbanes-Oxley Act (requiring auditor independence, separation of audit & consulting, yadda yadda).
Before IBM bought PwC Consulting, you may recall that it was on the verge of being renamed Monday.
Re:What the hell *is* IBM Global Services? (Score:5, Informative)
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.)
Ouch. (Score:5, Insightful)
Then again, any IT person not in a critical role should always be planning (financially, professionally, and personally) for layoffs or reduced compensation. IT is not, and never will be, a constant line of supply/demand. If you want job predictability, be a farmer.
It's also interesting they are dropping unprofitable contracts. Imagine if someone like Dell did that. More than 5 calls over the same user issue? "Sorry, sir, please repackage your computer and return it to Dell for a prorated refund. We are no longer interested in maintaining this support relationship or maintaining you as a customer."
Re:Ouch. (Score:4, Interesting)
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Never been a farmer have you? Let's just say your boss is more fickle than any in IT.
Go with GCI, Ta-Ta, Sy People, etc (Score:5, Insightful)
OTH, the Indian companies are hiring American, but at lower pay. They treat the employees like cattle (presumably like they do in India) and have little to no benefits. But at least the management does not suck. The companies are able to make profits. IOW, it may be time to outsource the American managers who are terrible at doing their jobs.
Re:Go with GCI, Ta-Ta, Sy People, etc (Score:5, Funny)
At least it is a country that worship cows...
It would be bad if they treat employees like cattles in Texas.
Re:Go with GCI, Ta-Ta, Sy People, etc (Score:5, Insightful)
I doubt you could have chosen a worse way to phrase your uninformed prattle. You are aware of how Indians treat cattle, aren't you?
Re:Go with GCI, Ta-Ta, Sy People, etc (Score:5, Funny)
Whatever happened to verifying sources? (Score:5, Insightful)
That's not what news people would term a reliable source.
It's not to say that this might not be true but I'd like to hear it from something a little more reliable than Cringely's watercooler.
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Cringely himself isn't what people would term a reliable source. He mostly writes speculative columns.
Cheers
A fraction of the salary (Score:4, Insightful)
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Why First Post when I can.... (Score:5, Funny)
(from inside my IBM cubefarm)
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?
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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.
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Don't Worry Guys... (Score:5, Funny)
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:Cringely might be ignoring the long-term... (Score:5, Insightful)
Presumably one would need those heads somewhere (Score:5, Interesting)
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One of my guys just got back from Bangalore on Monday. They had a job fair last weekend, big event, free food, etc. 6 people showed up in 8 hours. None of them passed even a rudimentary technical screening.
There is NO ONE in Bangalore available. Where does IBM think they'll get 150,000 engineers? It ain't gonna happen in Ba
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Correct me if I'm wrong, but here's what I *think* you said:
1. If you can farm out a work unit (presumably a task of some sort) to a cheaper (off-shore) resource, you do.
2. But you only do (1) if there is an available off-shore resource.
3. In your view, you're not seeing adequate off-shore available resources that can absorb the workload of 150k U.S
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Cringely can't do math... (Score:5, Informative)
SirWired
Total FT Staffing YE2006 was 356,000 (Score:3, Interesting)
IBM has succeeded! (Score:3, Informative)
I saw the light early on with them and got out. I hope most of my friends still employed there are also seeing the light and finding the door before its too late.
Of course from what I know and what I am hearing, IBM didn't do that nifty of a job with their clients either. They bring in contractors and temps to do the services contracts and with such a high turnover of temps and contractors, how on earth can you seriously to expect that you'd ever meet SLA, much less keep your customer??!!!!
How can you expect IBM who only *hires* managers and team leads, and then brings on "temps" and contractors to do the actual work and *dirtywork* on the client site, to actually succeed?? The one customer I was at was sorely pissed at IBM many times over for many things. Some justified, some not. Almost all the justified reasons were because the only people to provide the legitimate valued service to the client were done by people who were good, skilled, and knowledgeable;... and quickly left the temp gig with IBM and their clients for a real full-time permanent day job elsewhere with benefits and all that comes with it. That usually left the the client rather lacking and pissed. I watched it many times and finally a door opened for me and I left. This is only going to get worse people.
Wake up and smell the economic sh** they are shoveling your way.
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.
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Whoa, looks like someone's nervous about his job security.
10 p595s with 64 processors and a terabyte of RAM with the latest HMCs and Sharks are nothing to scoff at. We have dev servers running 200 Oracle instances per LPAR and we curiously happen to manage them with a far lower overhead than the guys we replaced. And that's just the start, technologically speaking. Other accounts have Linux clusters with hundreds of nodes, dozens of zSeries, you name it. Our location has one of the largest datacenters in S
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.
What has the management been doing? (Score:4, Insightful)
Why are the employees being punished when this is so obviously a management issue?
If the managers were doing their job correctly, then one of two things would of happened:
1) Either the projects would generate enough revenue to keep the current workforce, or
2) the workforce wouldn't of got "so large" that they need to cull it.
Call it cost saving if you will, but if I were working for IBM and got to keep my job, I wouldn't be turning up Monday. Or any other day for that. If these stories turn out to be true, I'll never buy something from IBM again. If IBM isn't being managed properly, get new managers, not cheaper staff.
I always thought IBM had built its empire on quality and innovation rather then being the cheapest.
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Let Me Tell You How it Actually Works (Score:5, Insightful)
Now you fire all those guys and hire a bunch of guys from Brazil at 1/4 the original team's salary. Even if the original team hangs around to train the new guys the new guys have to ramp up from scratch. Even if they're excellent programmers it's going to take them 6 months to a year to even get comfortable with the code, even with documentation in place. During that time the overall application design will get slightly worse as they try to implement new features in ways that don't fit in with the original application design.
In the mean time you've got 150 other tech companies realizing that people in Brazil will work for peanuts and they'll all move in to the country. Now your programmers are realizing that they can get more peanuts if they do the same sort of job hopping that we did in the 90s to get more peanuts. So over the course of the next year your team is replaced by new people who you have to pay a lot more money to and who are completely unfamiliar with your code base again. So now you're paying your Brazilians as much as you were paying your original programming team and they have no experience with your code base. Good job!
You can only save money that way if you buy into the fallacy that people are pluggable resources and experience counts for nothing. If you believe that then you can get as much done with a summer intern as you can with someone with 20 years of programming experience. Give it a shot sometime. And you can find a company that doesn't have that philosophy. I wouldn't want to work for a company that thinks I'm just a body taking up space anyway.
The New American Corporate CxO mindset... (Score:3, Insightful)
But the CxO's of the big American corporations aren't stupid. They know *exactly* just what a house of cards they're building... It's that they just don't care anymore. All they have to do is prop up their company's stoc
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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 offshore
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Re:Fuck you IBM (Score:4, Insightful)
Re:Fuck you IBM (Score:5, Insightful)
America has given many companies the fertile soil needed to create hugely successful businesses. Now these same companies have decided to take a big, stinky shit on that very same America, by offshoring everyone so that a tiny minority of people can go from super-ultra-rich to super-ultra-deluxe-rich.
If you don't see the problem with that, you're a moron.
Not all shareholders are super-ultra-rich (Score:5, Insightful)
If you think most managers don't deserve the salaries and bonuses they get, fine, I agree with you wholeheartedly. But the article says "The point of this has nothing to do with the work itself and everything to do with the price of IBM shares".
One usually thinks of shareholders as a mixture of Bill Gates, Darl McBride, and Steve Ballmer. Well, think again. I'm a shareholder of many companies and you are one too, if you have a pension fund, life insurance, or almost any form of investment. The point is that when you go to the bank and talk to your manager, your main preoccupation is how much you will get from your investment.
If you worry first about the social impact of the companies that make your pension fund and second about the financial results, well, kudos to you, but most people aren't like that. Maximizing a company's profits doesn't mean just making someone "super-ultra-deluxe-rich", it also means providing a decent retirement to people who have worked their whole lives to get it.
Re: (Score:3, Insightful)
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.
The 'make someone else pay' Theory Of Econ. (Score:4, Informative)
Does anyone at these corporations ever consider that by putting Americans out of work they're shrinking the size of their market? A little temporary boost in profits will be followed by a long term loss...
No, they aren't considering it. This behavior is straight outta a Marxist critique of market economics, where company A works to minimize their own labor costs, and counts on every other company to pay out enough to finance a market for A's goods... except that just about every firm is company A.
A classical Adam Smith economist will respond that the capital freed by (for arguments sake) IBM ditching thousands of employees can be more profitably deployed elsewhere by the Company and stockholders. Ex-employees, too.
A fly in that ointment is that nowadays, most of that capital is being redeployed out of the US, and it takes a while for the domestic economy to take up the slack with increased added value to crank the domestic incomes back up. Most US-based multinationals (if the Economist, Forbes, the WSJ, Biz Week, and my various stockholders reports are any indication) see their future growth in sales and headcount overseas. According to his latest financial disclosure statement, so does Dick Cheney. So, exactly how or when that increased domestic value is going to be created is an open question.
For the moment, the effect of the tide of money leaving the US is hidden by the Chinese and Japanese buying Treasury Notes to hold down the value of the yuan and yen. When that tails off, interesting things will occur. It's unlikely to be a meltdown, but it won't be pretty.