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Bob Cringely: IBM Will Jettison 78% of Their US Workforce by 2015
Gregg Eldred    

Bob Cringley has written a series of five articles concerning IBM. The last time he did that, in 2007, he revealed that IBM was ready to offshore and outsource thousands of IBM jobs, impacting employees and customers alike. He was rigth. Now, he returns, predicting, well, here it is in his own words (emphasis, Bob Cringely).

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 US employee head count by 78 percent in that time frame.

Reducing employees by more than three quarters in three years is a bold and difficult task. What will it leave behind?  Who, under this plan, will still be a US IBM employee in 2015? Top management will remain, the sales organization will endure, as will employees working on US government contracts that require workers to be US citizens. Everyone else will be gone. Everyone.

Let's continue on to his second article.

Global Services is a mature business that has been around for about 20 years.  In IBM’s 2015 business plan big income is expected from newer businesses like Business Analytics, Cloud and Smarter Computing, and Smarter Planet.  Can these businesses be grown in three to five years to the multi-billion dollar level of gross profit coming from Global Services?  Most of these businesses are tiny.  A few of them are not even well conceived as businesses.  It takes special skills and commitment to grow a business from nothing to the $1 billion range.  Does IBM have what it takes?

Probably not.

Do you remember eBusiness?  Do you remember On-Demand?  These are recent examples of businesses IBM planned to grow to billions in sales, businesses that no longer exist today.  Some claim that Blue Gene is shortly to be shuttered, too.

Actually, I see "eBusiness" nearly every day. It appears on my Linux server after I start WebSphere, ". . . ready for e-business . . . " Thanks, IBM, for that little advertisement.

Here’s a simple thought experiment. When it comes to these new software and Internet services, IBM’s competition comes from a variety of companies including Amazon, Apple, Dell, Google, Hewlett Packard, Oracle and others. Does IBM have an inherent advantage at this point against any of those companies? No. Is IBM in any way superior to all of them and thence in a position to claim dominance? No.


If IBM is planning a 78 percent staff reduction, then that will of necessity involve all USA operations, not just Global Services.  Hardware, systems, software, storage, consulting, etc. will all see serious staff cuts.  This means IBM could be moving a lot of its manufacturing and product support offshore.  Raleigh, Lexington, Rochester, and several other IBM communities are about to lose a lot of jobs.

That does not bode well for anyone, especially those organizations that pay IBM a lot of money for support, expecting a certain level of competence and knowledge from the support technicians.

IBM’s goal appears to be to have as few employees in the US as possible, maximizing profit.  But doing so clearly hurts customer satisfaction. Major IBM customers such as Amgen, The State of Texas, and most recently the Walt Disney Company have cut ties with IBM in favor of other providers. Many other customers are scaling back the services they’re buying from IBM as the perceived value continues to drop. Customers are starting to realize that they can directly hire offshore companies such as TCS, Wipro, HCL and Satayam and book the savings directly instead of paying IBM top dollar for support and then seeing that support fulfilled from BRIC [Brazil, Russia, India, China] countries. When IBM first started its big push to offshore technical work, the account teams were asked to make a list of reasons why customers’ work couldn’t be offshored, but were not allowed to use skills as a reason. That makes no sense in a rational organization but it makes perfect sense to IBM.

Link: Bob Cringely: Watch Out IBM!

Link: Bob Cringely: Not Your Father's IBM

Link: Something's Rottern In IBM Dubuque

Link: Bob Cringely: Magical Thinking at IBM

Link: Bob Cringely: How to Fix IBM in a Week

Apr 23, 2012
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Recent Blog Posts

IBM ConnectED 2015: A Few Problems
Fri, Dec 12th 2014 1:00p   Gregg Eldred
After giving this topic some thought, and soliciting some comments, it isn’t news that IBM has a few image problems with ConnectED. One could make the argument that these problems started a couple of years ago. As it is, this being the last (IMHO) conference for this particular IBM software group in Orlando, here are a few problems with ConnectED 2015: If you change the name of something, you will instantly lose a percentage of the customers you had attending. Remember all that goodwill, [read] Keywords: connections ibm lotus lotusphere linkedin planetlotus planetlotus.org twitter

Forbes: How to Fix IBM
Fri, Oct 24th 2014 8:03a   Gregg Eldred
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Tue, Sep 9th 2014 7:13a   Gregg Eldred
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Golf as “Exercise?”
Wed, Aug 20th 2014 2:20p   Gregg Eldred
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Dash4Dosh 2014: Let’s All Laugh
Mon, Jun 9th 2014 2:00p   Gregg Eldred
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Dash4Dosh 2014: A Quick Overview
Sun, Jun 8th 2014 3:20p   Gregg Eldred
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Thu, May 1st 2014 2:40p   Gregg Eldred
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Open Mic Webcast: Notes Traveler Support – Common issues, Interim Fixes, Q&A – 30 April 2014
Wed, Apr 30th 2014 6:00a   Gregg Eldred
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Dash4Dosh 2014: An Update
Tue, Apr 29th 2014 10:50a   Gregg Eldred
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