Published in News

IBM plans to lose 78 percent of US staff

by on20 April 2012

While profits soar

IBM is planning to reduce its US employee head count by 78 percent over the next three years and replace them with foreign based workers.

According to Cringely getting rid of that many employees in three years will be difficult. What the move will do is leave behind top management and the Big Blue sales organisation. It would also mean that all those workers on US government contracts will have to stay. Otherwise IBM offices will be populated by tumbleweed and a lone harmonica player.

Cringley quoted a long forgotten interview he did with Steve Jobs who said that the downfall of IBM was that it has best process people in the world. They just forgot about the content. In other words IBM thinks that it can export their entire business model to places were the labour is cheaper. The question is whether IBM's US customers will put up with that.  Americans, who are largely ignorant of other people's accents, really hate call centres answered by Indian staff.  If you want to know how hard they find this, remember that we are talking about a nation which could not accept Morecambe and Wise, because Eric's accent was too hard to understand.  [237 years and you still can't get over the revolution. Ed.]

Biggish Blue has fixed the problem of troubleshooting, using conference calls to instant messaging because the Yank's can't understand them. IBM’s biggest money maker is its Global Services business, which also employs the most people.  But that section of the company is not doing as well as it did a decade ago and this is the area where IBM jobs are being shipped offshore. Walt Disney Company got upset and left because of this.

Cringley said that what is odd is that IBM still has the same legendary layers of management it had in 2007. So it seems that IBM thinks that it can keep its managers and then move to a huge chunk of overseas workers and do the same thing. Fortunately for IBM, its grand plans tend to die a death in its bureaucracy.  In 2007 it planned remove most of its management layers and become slimmer and meaner.  That plan did not go anywhere because the managers who were responsible for the cuts were the same people who would have to go.

In this situation, firing all your US staff means that managers will have to deal with call centres and techies who they do not understand just like their customers.  Just like their customers they will change their minds too. 

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