IBM is planning a round of redundancies in the UK and Ireland despite healthy growth in profits in the second quarter. In company documents seen by The Register, employees in the UK-based Strategic Outsourcing Delivery division were told Big Blue will start an employee consultation period of 30 days on 2 August. El Reg …
"but bosses appear to desire increased productivity and improved profit margins"
There's a difference between cutting costs and increasing productivity. Smells like some manager wants to hit a target so they get a bigger bonus.
"Smells like some manager wants to hit a target so they get a bigger bonus."
Bingo. Same selfish short-sighted stupidity in play over here at HP. Doesn't seem to matter to them that long term they're hurting their customers (and their own staff), just so long as they make their numbers this quarter and pocket that all-important bonus.
Management by spreadsheet
It doesn't take a lot of creativity to look at your targets, revenue, and cost and say "[hey, to meet my target I need to cut X dollars in cost]"...
Imagine the dollars that could be saved by offshoring those middle management and executive positions :P
Gotta pay for the bubbly at the shareholders meeting (so the advert used to go).
...is a great way to shut the remaining workers up when faced with a wage freeze and benefits reduction.
Sorry but this article is a total fail.
If you listen to the financial reports. IBM's sales are down. With respect to consulting, you don't look at current quarter's revenue, but the size of the backlog. And guess what. Its down 6% when you look at it in terms of US currency.
Then when you add in flat to down in SWG. Sorry, IBM isn't growing.
The only way they are making the profits is in making higher cost employees redundant and buying back stock so that the earnings per share looks more attractive. (You're shrinking the float w the buy back.)
James has it right. Senior execs want to hit their incentive targets at the expense of the longer term outlook for the company.
What do they care? They will be able to retire on their bonuses alone.
Downsizing is easy, it's rebuilding capability after the end of the downturn that is the problem. If you cut too deep and then can't recover the capability when business starts to pick up then your competitors will steal a march on you. Whilst many middle-management do fall for the stupid idea that they can just go out to the market and pick up replacement staff (or even the same staff!) whenever they like, senior management usually are smarter (unless they're Mark Hurd) and will put off cuts if they think they can stomach a quarter of low returns but retain the ability to aggressively chase new business in the upturn. It is worrying that IBM's upper management have so little faith in the overall economic picture that they want more cuts. Seeing as they actually have to pay more to terminate an employee in the UK compared to the US, it may be a sign they are protecting US jobs at the expense of UK employees.
They are definitely not protecting US employees. Our US colleagues have been made redundant at a very steady pace for years now. The company had done this by a drip-drip process, keeping the numbers low enough to avoid any Federal reporting requirements. They also stopped issuing employees-by-country numbers because it was obvious they were making large numbers of US staff redundant and moving the jobs out to China and India.
Europe has known these redundancies were coming as earlier this year they said (and I'm paraphrasing), "We've allocated this cash to make European staff redundant." Guess where the jobs are going? That's right India and China.
Despite all the grandiose rhetoric they are subjected to, IBM doesn't give a shit about its employees when it's a matter of profits or executive bonuses. In the management ranks there is such a maniacal focus on hitting internal targets that frankly anything goes, whether that means screwing the careers of loyal employees, jeopardising customers' projects, or compromising suppliers' livelihoods.
You've got it spot on. It's an utterly shit company to work for. There are no incentives for performance so it's not worth making any effort at all.
I know a few folk who left during the last round of redundancies and they all walked into jobs with better pay. I intend to do exactly the same this time. Bring it on.
Of course, those who went turned out to have been needed so they were replaced with people with less experience and fewer skills, at more competitive salaries. Pay day for recruiters.
Still, there's probably a good few years worth of assets to strip before the bubble bursts.
I got out of big blue (voluntarily) in 2011 and helped myself to a 25+% pay rise in the process.
My career was stagnating at IBM, but I'm now in demand again. Leaving was the best thing I did for my career and my salary.
I know I'm going to regret this...
I think every article deserves a balanced commentary and so here goes.
I have worked for IBM for the past 6 years. In that time I have been developed and have grown in the company and been well compensated. I perform well in my job and get good reviews. My co-workers are great and as far as I can tell they also enjoy working for IBM.
There are nearly 500,000 people employed worldwide, there are going to be geographical pressures on that number and regional variation, especially as we move through this recessionary period. Almost every IBM employee is also a shareholder and is working towards some aggressive targets with the roadmap to 2015.
Some people won't like hearing that there are people enjoying their work in a very dynamic company and if you left IBM and got more money and opportunities, great, you made the right move, it happens like that. Sometimes you fit better in a different environment or structure and sometimes even change is enough.
There, I said it. Cue the accusations of corporate brainwashing etc. however, it is not all doom and gloom as it sounds here.
Re: I know I'm going to regret this...
Why regret, there are some people who do well and enjoy their time at IBM UK. Many areas of IBM, and even IBM UK, are thriving. Congrats, hope you enjoy your time at IBM and continue to do so, and no, that is not sarcastic, that is true.
Only question I would ask is what area of the business are you in?
In my 10 years plus, I have found there are quite large discrepancies in the way employees are treated in the different areas of the business. SO Delivery as it's now called, previously ITD is a one of a kind, only in my experience on a par with AMS in the UK. When you look back at employee satisfaction surveys in the UK, these 2 consistently came last, for a reason. IBM thought they could replace us all with cheaper resource elsewhere, and continued to do it, dragging employee morale down with it for those left. That was until IBM stopped the surveys, not liking the results, in the UK, and other countries ;-)
Would just point out a couple of changes in your statements. We're not close to 500,000, not even 450,000, and not every employee is a shareholder, far from it, when you consider the cheaper end of the employee market, they really can't afford IBM stock. And the "geographical pressures on that number and regional variation" has nothing to do with recession, don't be fooled by that. You weren't around in 2005 when the offshoring really got off the ground in the UK and mass redundancies were applied then, no where near recession times.
Like I said before, don't regret, enjoy your time at IBM, I know plenty that do. And like any internet forum, you're always going to get more of the negative before the positive.
Re: I know I'm going to regret this...
"a very dynamic company" - were you talking about IBM there?
Surely this part of the ongoing program at IBM to move jobs to low-wage countries; they've been doing this for at least a couple of years now.
One day someone will explain to organisations in both the private and public sectors the difference between 'effective' and 'efficient' - and that 'efficiency' is an engineering measurement with no real meaning in a financial context (but then I'm sure most people in finance know that).
No great surprise
It's hard for them to sell kit when they quote prices more than double the competition's.
If course, being IBM they try to cut things in the wrong area.
Re: No great surprise
IBM discount /n./
"A price increase. Outside IBM, this derives from the common perception that IBM products are generally overpriced (see clone); inside, it is said to spring from a belief that large numbers of IBM employees living in an area cause prices to rise. "
"Making money" and "cutting the workforce" are of course orthogonal concerns outside in the real world (i.e. away from "progressive" talking circles). But still...
Re: No great surprise
Depends upon the product you are talking about within IBM. Their storage gear is generally less costly than EMC. Their Unix servers are generally less costly than HP (and way better). x86 servers, well there you, generally, have a point.
Photoshop disasters of our time
The headline pic for this article on the front page. If that really is a photo of a man holding an axe, then that guy has one hell of a strong wrist
The simple truth is that IBM can make more money with no meatsacks than with them thanks to all the patents they own. People cost money and don't always produce it so they can easily be ditched
Ah those were the days
"career transition", "cash to piss off scheme" etc
Wait -- the Strategic Outsourcing Delivery department is being sent to India? Who could have seen that coming?
Well IBM could always bid for a UK scheme for IT.
They'll make millions and won't have to do anything.
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