IBM layoffs incite backlash
- 30 March, 2009 09:07
- Comments 4
IBM's news that it will shed some 5,000 North American jobs and potentially send more positions overseas has stirred up some bad sentiment toward Big Blue as the U.S. economy continues to languish.
IT professionals and others sounded off online regarding IBM's plans (first reported in the Wall Street Journal) to reduce headcount in its Global Business Services division and possibly relocate jobs to lower-cost offshore geographies -- despite the practice being part of Big Blue's long-term strategy.
IBM has publicly stated it would grow its global presence and tap local resources and talent around the world, offshoring jobs overseas for years now. Yet this week's news that IBM would eliminate jobs during the U.S. recession sparked a notably negative reaction to what some industry watchers refer to as a solid business strategy.
"True, IBM's been outsourcing for years. Times change and if you don't pay attention to it, it can bite you. This is one of those times when greed, whether it be bonus or cutting jobs, is a very touchy, high-profile area," one reader commented online. "[IBM] would be better off just reducing headcount, but when you add in 'replacing with lower cost employees,' then you get what you deserve in public backlash."
With outsourcing seeing a potential boom during the downturn, industry watchers argue IBM is making solid business moves.
"Some of these outsourcing firms are looking quite strong through the downturn and are using this economic pressure to show clients how they are working to be more productive in the future," says Paul Roehrig, principal analyst at Forrester Research.
For instance, IBM (which operates its own US$59 billion Global Technology/Business Services outsourcing division) saw strong gains in 2008. IBM reported revenue of US$103.6 billion in 2008, up 5% from 2007's $98.8 billion. Income for the year ended Dec. 31 came in at US$12.3 billion compared with $10.4 billion, a jump of 18%.
"IBM is actually doing just what it is supposed to do, taking care of the profit line for the company. It is amazing how we don't hear these complaints when the economy is good, only when it goes bad," one reader said online. "The principles [of capitalism and free markets] are the same any time, all the time, not just now."
And with lower cost alternatives to offer clients, IBM could potentially pass along the savings to its customers and remain a successful U.S.-based business during the recession, analysts say.
"IBM might be able to better compete with Indian offshore providers from a pricing perspective" by moving resources overseas and reducing its costs, Roehrig says.
Nominations for the 2012 ARN IT Industry Awards open on Tuesday, June 12.
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Comments
Omar
IBM should be punishisd@@@
The bottom line is that IBM cares nothing about its American Employees. They do not pass on the benefits of their greed to their American employees. If you are lucky you may be laid off after they get you to train your co-workers in India. I have seen many IBM co-workers who were top employees loss their jobs to India.
They should be penalized for moving so many jobs abroad when there is so much talent here in the United States.
AT&T is one of IBM's largest customers who should boycott IBM for sending so many jobs abroad. It is time for companies to start helping American rather then hurting America.
Anonymous
concerns
This is a nicely balanced article, with viewpoints from both sides. I tend to agree with the feeling that companies should make decisions based on their own interests, and if that includes hiring less expensive foreign workers in order to reduce costs, then they can do just that.
But Corporations can't have it both ways.
IBM receives state subsidies, tax breaks and direct government investments in return for "creating jobs" in several states, primarily New York. If IBM wants to reduce NY headcount and hire people in India, then fine. Eliminate the tax breaks and give back the public funds to New York.
Several companies, including IBM, have been to visit Obama and the federal government, to encourage spending in the Simulus Bill towards IT in Infrastruture such as "smart grids," medical records and other areas. The goal of the simulus bill is to stimulate the US economy and create US jobs. IBM wants to get some of that money, but hire foreign workers with it. That should not be allowed.
Anonymous
IBM uses Indians as cheap body-shop
I am working as an independent contractor in one of the big banks. IBM supplies Indians for development , they cost 80$/hr for the bank. On this price it is possible to find much better candidates on the local market. Banks management does it either because of convenience (IBM on the preferred vendors list so no formalities required) or conflict of interest exists( some form of lubrication). In my experience 50% of IBMers from India are not qualified. The same story with TATA.
Anonymous
IT ALL ABOUT CORPORATE GREED, THE IBM EXECS MAKE MILLIONS OF $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ A YEAR
NEW IBM MOTTO, BETTER FASTER,CHEAPER, OVERSEAS, INDIA, MANILA, PHILIPINES,NEGRON,EGYPT, IBM IS LAYING OFF FROM 16,000, TO 20,000, NATION WIDE. LOWER COST OF LIVING, LOWER PAY, THE IBM EXEC'S ARE GOING TO GIVE THEMSELVES, BIG BONUSES $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ AT THE END OF THE YEAR, MORE STOCK ALLOCATIONS, BIG CHRISTMAS PARTY! HOW DO THE IBM EXECS SLEEP AT NIGHT???? AND WE ARE LED LIKE LAMBS TO THE SLAUGHTER HOUSE. MAY GOD HAVE MERCY ON THERE SOULS!
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