back to article IBM's contractor crackdown continues: Survivors refusing pay cut have hours reduced

IBM's efforts to crimp the cost of its contract workforce are continuing, The Register has learned. Big Blue recently stopped hiring new contractors and asked those who remained to take a 10 per cent pay cut. Now it's trying to cut contractors' hours, in three ways. We were told today that some contractors have been told they …

Why contract these days?

When you look at stories like this (which may or may not be indicative of the wider industry), I wonder why anyone contracts these days. Add in the UK governments obsession with "equalising" tax payments for those who have permanent jobs and those who find they may not get paid for 2 weeks next month and it isn't surprising that we keep claiming there is a skills shortage.

Who would want to work under these conditions?

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Re: Why contract these days?

From my perspective, and from speaking to other contractor colleagues I'm not sure this is indicative of the wider industry - it's just IBM being IBM. Corporate and "management" fuckwittery of the highest order. They tried this back in 2004 also and I happily walked away to another client rather than agree to their terms. Whilst it may sound a little arrogant, I'm assuming the only reason any contractor would agree to this situation would be because they have either been at IBM too long and grown too comfortable - in which case they kind of deserve what they get; or that they don't feel they have the skills to move on - which again, begs the question as to their motivations as contractors.

There is plenty of work out there at the moment, both in the UK and mainland Europe. No reason to put up with any of this crap.

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Trollface

Re: Why contract these days?

I know it happens in the States but I don't think companies are allowed to do the furlough thing in Europe. Although it may be coming to the UK in a couple of years.

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Anonymous Coward

I don't think companies are allowed to do the furlough thing...

Not to permanent staff, but if the contract says they can, then they can. One of the real differences between being a member of staff and a contractor.

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Re: Why contract these days?

I know some companies force contractors to take 2-4 weeks off over Christmas, when things are normally quiet anyway. I suspect this is written into the contracts, so people go in with eyes open, though. Having the employer force you to take 2 weeks off without much notice is a bit off.

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Anonymous Coward

Re: Why contract these days?

It does happen in the U.K.

My previous client had a policy of telling all contractors to take some of August and December off as there wasn't enough need for them in those holiday periods.

The option was to either accept these 'close down' periods or take the notification as your 1 week's notice.

If IBM are complaining about hours, then why not 'force' contractors onto day rates? I get the same rate whether I do a 6 hour day or a 20 hour day - unless. I've negotiated a set price for a specific deliverable.

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Anonymous Coward

Re: Why contract these days?

"or those who have permanent jobs"

Contractors have permanent jobs too. The distinction you're looking for is staff vs freelance. Just because you own your employer doesn't mean you're not an employee.

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Re: Why contract these days?

"Who would want to work under these conditions?"

Contracting is not, and has never been for everyone. There is always more work for those at the top of their field than there are hours in the day, far too much to consider a permanency pay cut.

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Re: Why contract these days?

"I don't think companies are allowed to do the furlough thing in Europe."

If you are a contractor, of course they are. They key distinction between employees and contractors is mutuality of obligation.

Employees have mutuality of obligation, employer is obliged to provide work for them to do (or rather, pay them whether they provide the work or not), and the employee is obliged to do it in line with the terms of their contract of employment.

Contractors have no mutuality of obligation, so yes, they can indeed be told to take two weeks off, obviously unpaid.

On the other hand, two weeks is plenty of time to attend enough interviews to secure an offer, if your holiday plans don't happen to coincide with it.

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Re: Why contract these days?

It's true that contracting is getting less and less attractive.

I've been freelance for 17 years now, and am starting to wonder why I do it. I just can't bring myself to take the collar and leash of wage slavery though.

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Anonymous Coward

Re: I don't think companies are allowed to do the furlough thing...

Agree totally, they don't need you for a fortnight, go do some work for another client - that's what I do. These guys are running their own businesses, they should not be relying on a flaky customer like IBM.

If I was them I'd be pitching my services to the client - fuck whatever clauses IBM has written into their contracts, spark up a new Ltd. company and go get 'em!

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Re: Why contract these days?

I did this after 19 years and it was a pretty good decision - less stress, better hours, far less paperwork - the pay is lower but I don't have to deal with mystery fluctuations when someone decides to query my invoices (how can you charge that much for migrating our legacy PERL systems to a new server, the bosses nephew reckons he could have done it in a day!) and you don't get paid for a few months. But yeah, I'm a touch bored too,

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Re: Why contract these days?

Add in the UK governments obsession with "equalising" tax payments for those who have permanent jobs

Which is a direct response to many companies severely taking the piss by making practically every employee a "contractor" to avoid having to pay holidays, sickness, pensions and in some cases, the minimum wage.

Presumably it was thought that reducing the benefits to doing this would reduce the attraction for doing it for companies. Personally I consider that the companies taking the piss were the problem here, not the Government responding to it.

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Re: Why contract these days?

"Add in the UK governments obsession with "equalising" tax payments for those who have permanent jobs"

Which is a direct response to many companies severely taking the piss by making practically every employee a "contractor" to avoid having to pay holidays, sickness, pensions and in some cases, the minimum wage.

And many of the guilty companies are those offering outsourcing services to what were once in-house to local/central government and the NHS.

When NHS and education employees were being offered this kind of employment back in 1995, no wonder that the government was concerned about "Friday to Monday" changes in employment contracts, for government itself was going to be a driving force in that direction.

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Unhappy

Re: Why contract these days?

Why? Many people have no choice. Many companies offer NO choice.

People don't work crappy jobs because they want to.

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Anonymous Coward

Re: Why contract these days?

I work in the UK as a contractor - we are most definitely furloughed, twice, each and every year in the company I work for.

Exemption requires the CTO to sign off on it.

I work for a major mobile carrier.

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Anonymous Coward

Re: Why contract these days?

IBM is doing this in the UK now, and has been for a while. Delivery Managers have to load furlough plans with a minimum of 2 weeks per quarter per FTE contractor. When accounts / sectors miss the targets contractor hires / extensions are suspended or take monumental effort.

Doesn't seem to matter if it impacts customers... people are just told to keep it hush from the client.

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Re: Why contract these days?

" I wonder why anyone contracts these days."

I was with HP as a contractor when they tried this nonsense and tried to play hardball with the contractors. We had a meeting and we all said "Fine, we'll be off then if you don't need us."

Odd, how a big company can suddenly realise what a massive gooly it has just dropped. Several years on I'm still contracting and my day rate is a lot higher than it was then.

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“be forced to reduce their CLAIMED hours by 15 per cent.”

and then it just gets worse as the article continues.

Might as well just say "Anybody who can get a job elsewhere, please do so. Those unable to get employed will shortly be appearing as the new expensive IBM expertise on customer sites."

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Holmes

Re: “be forced to reduce their CLAIMED hours by 15 per cent.”

But taking a pay cut in return for reducing your hours is a lot fairer than taking a pay cut ... and having to work the same number of hours. I know which I'd prefer.

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Re: “be forced to reduce their CLAIMED hours by 15 per cent.”

Might as well just say "Anybody who can get a job elsewhere, please do so."

Or this:

“In the last seven months I've pretty much worked constantly with five of my former clients, who have hired me directly to do the same work they can no longer find anybody at IBM to do.”

Non-compete clauses? IBM is repudiating its own contracts so it might have a hard time enforcing them.

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@Unep Eurobats Re: “be forced to reduce their CLAIMED hours by 15 per cent.”

These are contractors who are paid by the number of hours worked and the 'pay cut' is a reduction of their hourly rate.

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Coat

Re: “be forced to reduce their CLAIMED hours by 15 per cent.”

What is IBM actually providing? Access to software? Access to servers? What is to stop people dis-intermediating the big blue fairly aggressively and at scale?

Coat: actually shorts and flip flops at present in UK

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Joke

Re: “be forced to reduce their CLAIMED hours by 15 per cent.”

You're clearly a contractor. An employee wouldn't have to go get his shorts so he could leave.

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Reducing hours is a better deal

Yeah, with 15% fewer hours you make 15% less money, but that's better than the guy who is working the same number of hours before and making 10% less money. Free time is worth something, and if your objection is "but I need that income to pay bills" then you shouldn't be a contractor - contracting is absolutely 100% not for people who live paycheck to paycheck, and don't have reserves to tolerate months off work, let alone a two week surprise furlough. If I was contracting for IBM, I'd respond to the 15% fewer hours by working 8.5 hours a day instead of 8 hours a day, and taking Fridays off. Your move, IBM.

As for the emphasis on "CLAIMED" hours in this thread, claimed hours = actual hours. If it doesn't, you might as well not be contracting. I've never worked a single hour I wasn't paid for - if I'm on a contract that limits me to 40 hours a week of work, when I hit 40 I'm done for the week, or I take it as comp time in a future week (if such an arrangement has been made) Anyone dumb enough to work 40 hours for IBM and bill them for only 34 hour needs to realize they turned down a 10% pay cut in favor of a 15% pay cut!

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Seems things will be getting worse before they get better - but gut feeling says it will be MUCH worse.

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Meh

I notice my bigcorp is taking the hint from IBM and HP

Everything was rosy last quarter, but now Savings Must Be Made.

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Re: I notice my bigcorp is taking the hint from IBM and HP

They're not taking their hint from IBM and HP, they're taking their hint from Wall Street. The market is overvalued right now, with overly high P/E ratios. Stocks that can't make earnings to justify their valuations will be punished in favor of those who do, and stock prices going down hurts senior management who typically have stock options or bonuses based on "shareholder value" (which unfortunately is shorthand for stock price, because compensation committees are lazy)

They respond with cost cutting measures to save quarterly results because failure to make quarterly numbers hits them in the wallet. Once they reach a point where even extreme cost cutting won't allow them to make the numbers they'll either leave for another job, or try to bring forward a bunch of expenses to make a few quarters REALLY bad, to lower Wall Street expectations and set them up for making big bonuses next year for their "recovery". Short term measures lead to short term management.

Don't worry, when the inevitable correction hits, it will be easier to make targets, and the pressure will be off. Assuming your company is actually healthy, and not in dire circumstances like IBM and HP. HP has been in cost cutting mode for about 15 years now, and now that they've driven away all the competent people the chickens are coming home to roost. IBM didn't have that head start, but they're doing their best to catch up in only a few years' time.

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Re: I notice my bigcorp is taking the hint from IBM and HP

"HP has been in cost cutting mode for about 15 years now, and now that they've driven away all the competent people the chickens are coming home to roost."

Which goes a long way towards explaining how lifetime (30 year) LTO media warranties have been changed to 3 or 5 years.

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Anonymous Coward

Re: I notice my bigcorp is taking the hint from IBM and HP

Cloudy outlook? There's a storm coming.

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Anonymous Coward

Re: I notice my bigcorp is taking the hint from IBM and HP

Someone on ZeroHedge warned that IBM could be looking at bankruptcy because a high ranking insider warned that the saving drive is extreme; so much so that expensive projects are being stalled because ordering a cheap part can't be authorised and warns IBM people to beware!

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Anonymous Coward

Re: I notice my bigcorp is taking the hint from IBM and HP

The problem is that cloud has now started to bite and it is very disruptive. 15 years ago IBM made big money on outsourcing. But then everyone saw how much they were making and all piled in -- the margins dropped and companies got wise to how to deal with the outsourcers (no more billion dollar deals, but maybe $100 or just $10 three-year rolling contracts).

In fairness to IBM they saw the writing on the wall some time ago and have been trying to ditch the outsourcing business and focus on cloud. Their selling point was/is to add these high-value business services on the back of them, so cloud is cheap or a loss-leader, and then the businesses are all supposed to want to buy into Analytics, etc.

While IBM has been pushing AI (branded as Watson) everyone else has jumped on the AI bandwagon. It remains to be seen how successful this will be for everyone, but the proof of the pudding will be how much money those companies that come to IBM and the rest can make on the back of this technology.

If Brexit means we get anti-austerity, inflationary policies that put more money into Joe Public's pocket, this may help in the longer term.

Oh, look, is that a flying pig?

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At this rate there will soon be no IBM worth talking about.

Unfortunately the rot started a long while ago when the MBAs and marketing wonks got control in the board room.

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Unhappy

Abuse, plain and simple.

Only those who cannot walk for whatever reason can conceivably still be contracted to IBM. This sounds like straightforward abuse of such people. Without doubt a mass walk-out by contractors would hit IBM where it hurts but sadly, it would hit the contractors that much harder.

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Anonymous Coward

Re: Abuse, plain and simple.

Not really.

IBM loses it's ability to support the customer.

The customer sues for breach of contract.

IBM wins court case.

IBM loses customer.

End result? Contractor still looking for a new contract, so better to start now before the flood of contractors hits the market.

AC because I am ex IBM and loving it.

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Facepalm

Re: Abuse, plain and simple.

One obvious question - who picks up these extra hours if it's no longer the contractor? It has to be the remaining permies.

Way to go for morale boosting, Intense Bowel Movement.

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Re: Abuse, plain and simple.

What happens is all the best people leave - basically the ones who were propping up everyone else. Because only C/D players are left, contracts are lost or not won.

It's basically a death spiral. IBM is circling the drain.

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Re: Abuse, plain and simple.

"End result? Contractor still looking for a new contract"

End result, if they've any wit, contractor still supporting ex-IBM customer and divvying up IBM's slice between them. Sort of having your cake and eating it.

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Re: Abuse, plain and simple.

I've never contracted for IBM, but when I've contracted for a company that supported another customer, my contract has always included language preventing me from working, directly or indirectly, for that customer for a couple years or so. The contract the company has with that customer also prevents THEM from hiring on any of their staff or contractors, directly or indirectly.

I'm sure this sort of thing still happens because it isn't worth fighting over, but I've never thought it was worth testing those clauses. Maybe it is a more reasonable course of action is less sue-happy countries than the US.

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Re: Abuse, plain and simple.

"What happens is all the best people leave ... It's basically a death spiral. IBM is circling the drain."

This is my perception of what happened at Northern Telecom. They made a whole load of people redundant. That, in turn, made lots of people nervous. Including Nobel Prize calibre physicists. Turns out that if you make that quality of person investigate their market worth then they discover that they can get a *much* better deal elsewhere, all the smart people left and Nortel declined into bankruptcy.

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Re: Abuse, plain and simple.

"my contract has always included language preventing me from working, directly or indirectly, for that customer for a couple years or so"

It sounds like you have a badly written an IR35 caught contract, at least in UK terms.

The contract should be between ClientCo or AgencyCo and YourCo not you. As someone said in a previous comment, start YourCo2 which never had such a contract.

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This post has been deleted by its author

Anonymous Coward

Re: Abuse, plain and simple.

Increasingly, the contract between the agent and YourCo is including obnoxious clauses.

Currently looking at a new contract where the agent is wanting to put a clause demanding 25% cut of the earnings for a year if you end up working for the same client through a different agent. And when the client they are talking about is IBM, that puts a significant restriction on where you can find future contracts in my main line of work.

I personally think it is an abuse of the unequal power relationship between a big agent, and a small contracting company, but the only power I have is not to accept the contract, which otherwise is attractive, as long as they don't attempt to trim the rate from what was on offer last week.

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Re: Abuse, plain and simple.

All my contracts are between my corp and another corp (a go between for the BigCorp I'm consulting for, because in the US no big corporations will contract directly with a little one person corp like mine)

This language covers anyone my corp employs on the contract, which is always just me, but if I had others in my corp it would affect them too. I asked about that clause once long ago, and was told it was a requirement of BigCorp to the go between so there was nothing they could do about it. I've had clauses struck from contracts before, but I only bother with ones that would negatively impact me to a significant degree like noncompetes, and this is one that does not impact me.

Since all of my contracts have been made through contacts in the various BigCorps, who then sole source me to their go between, I'm not beholden to that go between. If I find something I want struck, like the 25% example provided, if they won't play ball I tell my contact. They've always been able to tell the go between to do what I ask. It also allows me to negotiate my rate directly with the contact - the rate that will be paid to the go between. I then tell the go between they can take $10/hr, and if they squawk remind them I arranged the gig, not them, and there are other go betweens available for BigCorp (not always true, different divisions may have set go betweens, but by this time they're scared of me and just accept that I'm probably telling the truth)

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Anonymous Coward

Going, going...

Gone?

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"This has been communicated to senior IBM management as non-negotiable with no recourse for exclusion, regardless of the business case or impact to clients"

Oh dear, and they wonder why they lose contracts. A big fuss used to be made about 'New Logo' contracts, but not enough effort put in to keep the existing customers happy. I guess they see the landscape being paved with three year tie ins, and customers are disposable after.

I bet the trophy wall at Warwick looks a bit sparse these days.

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Anonymous Coward

Long since replaced by staff art exhibitions...

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Nothing new

HPE were doing this when I was there.

10% Rate cut demands

Easter "Furlough" - 4 days

Summer "Furlough - 8 days

Christmas "Furlough" - 10 days

All sprung on you with no notice. When you aren't there the increasingly sparse, and non overtime earning, permanent staff get battered to cover the gaps. They can't and customers suffer.

I won't work for them again, they either want the job you were employed for doing or they don't. I worked a "professional" day so they were already getting at least a free day a week off me as it was but they still had to take the piss and push it.

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How does IBM keep winning outsourcing contracts if things are that bad?

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How does IBM keep winning outsourcing contracts if things are that bad?

FTFY

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