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IBM Businesses The Almighty Buck

Cringely Predicts IBM Will Shed 78% of US Employees By 2015 273

Posted by timothy
from the should-switch-to-fashion-branding-with-cool-logo dept.
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?"
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Cringely Predicts IBM Will Shed 78% of US Employees By 2015

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  • Brilliant! (Score:5, Insightful)

    by Moheeheeko (1682914) on Thursday April 19, 2012 @12:19PM (#39734983)
    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.
    • Re:Brilliant! (Score:4, Informative)

      by jdgeorge (18767) on Thursday April 19, 2012 @12:23PM (#39735035)

      If Cringley's numbers are approximately correct, I don't think IBM can get to a 78% reduction in 3 years using their current strategy of staying below the reporting requirements for layoffs.

      • Re:Brilliant! (Score:5, Insightful)

        by Megane (129182) on Thursday April 19, 2012 @12:33PM (#39735163) Homepage
        Do they have to report it as "layoffs" when they sell off entire business units to other companies? [slashdot.org]
    • by antdude (79039)

      Is it too hard/difficult to add apostrophes to your post? ;)

  • Odd timing... (Score:4, Interesting)

    by grub (11606) <slashdot@grub.net> on Thursday April 19, 2012 @12:22PM (#39735025) Homepage Journal

    The IBM building across the road from the lab I work at here in Winnipeg just had a "For Lease" sign go up yesterday.
  • Series of Articles (Score:2, Informative)

    by Anonymous Coward

    This is just one of a series of articles he's releasing this week. Two of them are currently available on his site.

  • Absurd (Score:5, Informative)

    by jbrodkin (1054964) on Thursday April 19, 2012 @12:26PM (#39735071)
    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.
    • by scsirob (246572) on Thursday April 19, 2012 @01:08PM (#39735593)

      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..

    • Re:Absurd (Score:4, Interesting)

      by Rolgar (556636) on Thursday April 19, 2012 @01:41PM (#39735919)

      I submitted the original article on Slashdot 5 years ago [slashdot.org].

      You're right, it didn't happen. But maybe by getting the word out, maybe Bob changed IBM's course of action. Maybe instead of laying off most of their domestic workers over the last 7 months of the year, they switched and went with a more gradual move to prevent losing most of their businesses in the U.S. which would have been a very risky undertaking.

      If what Bob says is true, then we have a choice. We can let the trend continue, or we can let our state and federal representatives know that we'd rather have work done by small local businesses instead of the megacorps. Of course, we need to let everybody know that we are selecting between two options, a cheap one and a more expensive one. Demand that the more expensive group deliver premium service, and I don't think anybody will complain. Deliver lower quality or have a worse record on up time or missing deadlines than the cheaper alternative, and know that the taxpayers will demand that the next contract will be bid out to the cheapest bidder which will be IBM or another big outsider.

      • Re:Absurd (Score:5, Insightful)

        by jbrodkin (1054964) on Thursday April 19, 2012 @01:48PM (#39736013)
        No, it didn't happen because it was never a realistic prediction. Those types of layoffs happen at failing companies. IBM is not a failing company, it is a company making massive profits and revenue. I think IBM probably has too many employees, and is making cuts that percentage-wise are small and likely make sense from a business standpoint. But the company had no need in 2007 to shed massive amounts of workers, and no need to do so now. The idea that the Cringely article from 2007 prevented IBM from laying off a third of its work force is ridiculous. That is not how companies make decisions.
      • Re:Absurd (Score:5, Informative)

        by jbrodkin (1054964) on Thursday April 19, 2012 @01:51PM (#39736061)
        Also, I submitted (and wrote) the article that rebutted the 2007 one: http://it.slashdot.org/story/07/05/07/2116251/analysts-call-ibm-layoff-estimates-hogwash?sdsrc=rel [slashdot.org] Cringely was claiming that IBM was about to lay off its ENTIRE US workforce. Come on, at some point you have to exercise a little common sense and not report things that just can't be true.
  • by alen (225700) on Thursday April 19, 2012 @12:29PM (#39735119)

    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

    • by timestride (1660061) on Thursday April 19, 2012 @12:35PM (#39735191)
      Amen-- Cognos is a mess. The thing I hate the most is that their support staff only know certain aspects of the suite. If you have an issue with Cognos Planning, but you are accidently routed to someone in the Cognos Business Intelligence support group, they have to reroute your case and you'll be waiting at least several hours before they call you back. Heaven forbid you have an issue with integration between the two suites.
      • by drinkypoo (153816)

        The thing I hate the most is that their support staff only know certain aspects of the suite. If you have an issue with Cognos Planning, but you are accidently routed to someone in the Cognos Business Intelligence support group, they have to reroute your case and you'll be waiting at least several hours before they call you back. Heaven forbid you have an issue with integration between the two suites.

        I've never heard of Cognos but I used to work for IBM acquisition Tivoli and I can tell you why that happened there. First, the invidual products (I worked on TME10 Inventory) are massively complicated and horribly underdocumented. I had to go to meetings with the developers to understand the product well enough to support it. So you really need product-specific teams. Second, switching from one team to another once you've been there for a while is a political process, so odds are you're not going to get a

    • by billcopc (196330)

      Buddy, I'm from Ottawa. I live just a few minutes from the main Cognos building, where many of my old college buddies used to work. In the opposite direction used to be RIM's big bad campus. Another few km north stood Nortel. And I can't remember the name but there was this giant faceless consulting firm a few years ago, J.P. somethign... J.M.B. I dunno, started with J. Anyway, they're all gone.

      If I've learned anything from this city, it's that we can't sustain any big tech company. We have lots of

    • 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 )

    • by chthon (580889)

      No, no, the Continuus/CM/Synergy people. If there ever was over-expensive crap software that needs to die right away, it is certainly this. It is written against all good rules of CS, it is extremely slow and costs possibly as much in lost time as the licence costs. Please, please, please kill it of now.

  • Probably Wrong (Score:5, Insightful)

    by elbonia (2452474) on Thursday April 19, 2012 @12:31PM (#39735135)
    Considering the fact that most of his big predictions are completely wrong why believe he's right? When did Apple buy out Time Warner Cable? How about Facebook forking and going against LinkedIn. Or Apple’s white iPhone 4 would be the Verizon iPhone 4?

    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/

    • Re: (Score:2, Interesting)

      by Anonymous Coward

      Also posting anonymously because I've been a grunt on the inside. It doesn't matter if the timing of his numbers is right, the bigger picture is definitely there.

      IBM employees in the Americas need to unionize. Yesterday.

      http://endicottalliance.org/

      • Re:Probably Wrong (Score:4, Interesting)

        by ciggieposeur (715798) on Thursday April 19, 2012 @01:11PM (#39735627)

        They needed to back in 1999-ish when Gerstner began fucking with the pension.

        Alliance@IBM was really useful though circa 2003. Gave us plenty of warning that a Resource Action was coming to Software Group in RTP.

      • Also posting anonymously because I've been a grunt on the inside. It doesn't matter if the timing of his numbers is right, the bigger picture is definitely there.

        IBM employees in the Americas need to unionize. Yesterday.

        http://endicottalliance.org/

        Meet the new boss, same as the old boss.

  • by IGnatius T Foobar (4328) on Thursday April 19, 2012 @12:33PM (#39735161) Homepage Journal
    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...)
  • by MikeRT (947531) on Thursday April 19, 2012 @12:36PM (#39735203) Homepage

    While it looks good on paper it is not practical and is not working. The language barrier for IBM’s Indian staff is huge, for example. Troubleshooting, which was once performed on conference calls, is now done with instant messaging because the teams speak so poorly. Problems that an experienced person could fix in a few minutes are taking an army of folks an hour to fix. This is infuriating and alarming to IBM’s customers.

    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.

    • by El Torico (732160)
      I've been having lots of fun with Juniper support lately. One of our WAN accelerators died (third one of that model in two years I was told), so I opened a ticket; the support staff in India issues an RMA. After a week, they said the unit was delivered and signed for by "Mary". There's no Mary at my location. I told them that we didn't get it. A week later, the unit finally shows up. However, they sent the RMA using a company that can't get onto my facility (on a military base). So, I went and got it
  • by Karmashock (2415832) on Thursday April 19, 2012 @12:37PM (#39735217)

    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.

  • by rudy_wayne (414635) on Thursday April 19, 2012 @12:45PM (#39735297)

    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 standar

    • Re: (Score:3, Informative)

      by forkfail (228161)

      Actually, the US lags behind other Western democracies in the things you enumerate as being overly costly.

      So those that the system has entrusted with overseeing our business and industry sends our jobs to second and third world nations - and they reap huge bonuses for doing so, and thereby, destroying our economy and nation.

    • You don't understand how corporations work. Apple is not saving a boat load of money making iPhones in China. At most they are saving 20% but they are still making 70% profit margins. Consumers are paying a premium for Apple products like the iPhone and that still does not motivate Apple to bring production back to the States.

      Corporation only care about profits and will do ANYTHING to the workforce to control labor costs.

      Blaming the government won't solve the problem. Holding corporations account
      • by Bigby (659157)

        Hold them accountable by buying hundreds of millions of their product? Or do you just want to impose morals on companies through law? Because that works.

      • I think you're talking past each other. Nobody is suggesting that we shouldn't have anti-pollution or health and safety laws just because they can be expensive. (Although let's not ignore that certain laws can cause suboptimal results that we should strive to avoid, e.g. if people are coerced into hiring unqualified applicants on the basis of race.)

        I think you're both saying the same thing: That consumers should buy American-made products even if they cost more. The problem is that that doesn't really work:

      • by Svartalf (2997)

        If they're only saving a 20% advantage over their US BoM, why even DO it in the first place? Quality's not the same dealing with China. I'd rather be dealing with Taiwan on manufacturing (and even then, that's a relative concept... I'd rather be dealing with a US manufacturing interest...they're less likely to screw around with designs, rip them off, etc. just to make more on their margins...). So you can "save" a couple of million on costs? Odds on, they're not even saving that much on production- it

    • Re: (Score:2, Informative)

      by UnknowingFool (672806)

      Other countries don't (yet) have these, so their cost is lower.

      They don't? Obviously you don't work in Europe. In the socialist leaning countries, these rules do not get much press because they are no big deal. In the US, laws to ensure equal protection are treated by some (like yourself) as the cause to end civilization. How dare women demand to be paid the same money as men for doing the same job? Don't they know exploitation is a God-given right in this country?

      • by Xandrax (2451618)

        "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.
           

    • by biodata (1981610)
      Nobody wants employees any more, that's why the western governments sold everything they could in the 80s to corporations, and now the corporations are offloading to thrid-world subsidiaries. It used to be that doing a job well would earn you a salary, some healthcare when you were sick, school for your kids, and a pension when you are too old to work anymore. Our ancestors had to fight the rich tooth and nail for this minimum human dignity, mostly by forming strong unions with each other. The rich reali
    • by Svartalf (2997)

      How about just simply winnowing out the bullsh*t regs that you're referring to as the source of expenses in business (which would be a good portion of the expenses, really...). Most of them are byzantine and largely impossible to abide by in the first place.

      Once you rid yourself of the rubbish, it suddenly gets cheaper (Offshoring only LOOKS cheaper on paper- it inevitably makes it more expensive farming stuff out to India, Taiwan, or China...) and your quality will be the same or improve.

  • 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

    • by forkfail (228161)

      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

    • by tqk (413719)

      At the very least, these companies have benefited from the U.S Legal and industrial infrastructure. ... 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.

      I think it would be better to just add them to your list of companies to boycott until they come around. Getting the Feds involved isn't going to fix anything, and will likely just make it hurt more.

      ... assuming there's any truth to the story in the first place. Someone mentioned this story is from 2007.

    • 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.

  • 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.
  • This certainly puts the recruitment message from an IBM recruiter I got on LinkedIn last week in a new light.

  • by ipv6_128_lgwb (70428) on Thursday April 19, 2012 @01:54PM (#39736107)

    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

    • Re: (Score:2, Informative)

      by Anonymous Coward

      I started in 99 with IBM as well. I got hit in this last round in the 1st quarter of this year. To be honest, I was glad to go, and feel sorry for the folks still there. When I joined, it was an AWESOME company to work for. Not anymore, it just sucked daily. No responsibility at the management level, and lots of finger pointing. It was hell.

  • They forgot the rest of the headline.

  • 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?
  • by roc97007 (608802) on Thursday April 19, 2012 @04:32PM (#39738329) Journal

    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.

  • by FriendlyPrimate (461389) on Thursday April 19, 2012 @05:25PM (#39739125)
    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 [wikipedia.org]

    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.
    • by forkfail (228161)

      Two results of this:

      1. It destroys free enterprise and competition.

      2. It creates a system where those who create can only do so in limited venues, and for a limited time before they're thrown on the rubbish heap. And those who create get an even smaller share of the rewards (no more tenure because you built a ten million dollar product).

      Really, really sad state of affairs is this post industrial feudalism

  • by gelfling (6534) on Thursday April 19, 2012 @09:23PM (#39741449) Homepage Journal

    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.

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