Cringely Predicts IBM Will Shed 78% of US Employees By 2015 273
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timothy
from the should-switch-to-fashion-branding-with-cool-logo dept.
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?"
Odd timing... (Score:4, Interesting)
The IBM building across the road from the lab I work at here in Winnipeg just had a "For Lease" sign go up yesterday.
Re:Probably Wrong (Score:2, Interesting)
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/
Responsibility is expensive (Score:2, Interesting)
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.
Article is dated in 2007 (Score:0, Interesting)
This article was from 2007. We should of seen the massive layoffs by now...
Re:Brilliant! (Score:4, Interesting)
If I recall, IBM doesn't wield patents like ..say .. Oracle. They don't run around suing people for the heck of it. What typically happens is IBM gets sued by random small corp for some minor patent that IBM may be infringing on, IBM then offers a cross licensing agreement that is favorable to IBM, but does not overly punish said random company. The random company then has a choice, cross license, drop the suit, or lastly go to court, at which time IBM lawyers drop the patent portfolio on the table and says "we're suing you for infringing upon $X number of our patents, and we are suing for compensation"
And guess how well that goes for the Random Company? Which is why you don't see IBM in courts much. They just want licensing agreements and do business. Granted, not all of IBM lawyers are dealing with patents, which is what the lawyers were doing regarding SCO.
Re:Probably Wrong (Score:4, Interesting)
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.
Re:Absurd (Score:4, Interesting)
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:Brilliant! (Score:5, Interesting)
Because nobody thinks this stuff through, teaching it at business school or not.
Everybody tries to appease the "stock market" because it's "increasing shareholder value" (Don't you mean shareseller value, guys? Let's be honest here- since there's no real way to obtain value through dividends, etc. you have to sell it off to some bagholder at some point or short it to them...)
Re:Curious (Score:5, Interesting)
No... Wrong answer from start to finish. You can still have issues with tight specs, paying well, etc.
Prime example: Bindeez/AquaDots [wikipedia.org]. 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.
IBM is getting out of software development. (Score:5, Interesting)
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.