IBMs’s CEO Sam Palmisano is the Biggest Outsourcer of US Jobs Out of The Country
The Human side of wall street and IBM’s greed.
Today’s (Sept 15, 2009) the www.Street.com has an article written by James Roger’s entitled, “IBM: Best in Class”- saying CEO Sam Palmisano- has been earning applause for successfully guiding the tech giant through the economic downturn.
But the truth of the matter Palmisan for going on the last five years has been the biggest de-porter of good paying benefit jobs to the BRIC (Brazil, Russia, Indonesia and China) countries. He has crafted the hugest layoff plan over these five years that the nation has ever seen in a 100 + year old technology company, and done it in the most brutal ways possible. I’m sure all of this is a surprise to many readers. IBM has managed to keep a lot of it quiet by threatening to pull advertising money away from the nation’s largest newspapers and trade publications. All these publications are dependent on millions of dollars in IBM’s advertisement to help stay afloat during these difficult times for print publications. Computer Reseller News, Computer World, Network World VAR Business etc to name just a few let alone Business Week, US News and World Report. Technology research companies like IDC , Forrester and the Gartner Group are already losing subscription services and don’t want to lose more from their largest customer so IDC headed by Kirk Campbell continues to write flattering things about IBM, what the industry calls puff pieces and disguises it as the genuine research.
Yet IBM had let many hundreds of thousand of US employees go in deference to moving the money from their salaries and benefits to these foreign lands where the pay scale, benefits and cost of living is far less expensive for the giant computer and network services manufacturer. These people will work for 10-25 cents on the dollar compared to the US- but once their living standard goes up they too want more.
All this loss of US jobs makes the wall street equation that Jim Cramer and others extol look good- but does Jim Cramer of Wall Street ever think about the 52 year old IBMers who are just short of getting a dramatically reduced IBM pension (reduced in 1999) out of work with two kids in college and one in high school. Does Jim Cramer ever given them a thought as he sits at his NJ beach house and Sam Palmisano never gives them a thought either. For Connecticut locals I once saw Sam and his kids buying a couple dozen Crispy Crème donuts at a rest stop on the Merritt Parkway. Sam looks like maybe you been downing a few too many and it’s gone to your head.
I can never fully express the destruction in lives , the loss of homes, the clinical depression and the sad days that former US IBM employee families had to tell their kids that sorry we can’t send you back to your College cause 50 + year old mommies and daddies lost their jobs at the hands of Sam Palmisano. Or the 53 year old single women with 3 master’s degrees who was so bullied by Somers NY senior IBM executive VP Mark Ouellette and his all male team that he let her go when she was out on an IBM approved disability which the employee had paid into for 10 years.
Yes the Communications Union has websites that go for hundreds of pages documenting what the loss of these jobs have done to Disabled IBMers with families to support all because Sam Palmisano wants to make Jim Cramer’s and Wall Street bottom line.
Shame on you www.thestreet.com for not recognizing the shame Sam Palmisano has brought to this country for his almighty buck- oh well what does he care he retires rich in CT in a couple of years.
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35 Comments
General premise of the article is correct, although some of the numbers need to be re-checked. IBM has gone from about 152,000 U.S. employees in 2002 to about 98,000 currently. With another 5,000 to 7,000 planned for layoffs between now (Oct 1, 2009) and Jan 31, 2010.
This is being done to lower costs, partly in terms of salary and benefits. But also it is being done to take advantage of U.S. tax laws that allow overseas investments to go un-taxed until the money is brought back into the U.S. There used to be a relatively short time period allowed for ‘re-patrioting’ overseas profits, but now companies can wait years to bring money back on-shore. They can wait until exchange rates are favorable to help increase profits. This encourages long-term investment in overseas facilities and deters investment in U.S. facilities and personnel.
The following are the IBM North America
job cuts for 2009
as of August 26, 2009
Alliance@IBM has verified these job cuts through the receipt of
Resource Action packages.
(These include a small number of cuts in Canada)
Systems Technology Group = 1213 cut (Jan)
Software Group = 1419 (Jan)
Sales and Distribution = 1449 (Jan)
IBM HR = 92 (Jan)
Marketing and Communications = 147 (Jan)
IBM Research = 193 (Jan)
IBM Finance = 307 (Jan)
US CIO = 411 (March)
Services Delivery = 985 (March)
GBS Application Services = 1674 (March)
GBS Consulting services = 998 (March 26)
Managed Business Process Services = 97 (March 26)
Global GTS = 181 (March)
Systems Technology Group = 37 (March)
GBS Application Services = 462 (April)
ISC Global Supply = 245 (April)
Services Delivery = 87 (May)
Services Delivery = 222 (July)
Rational and WPLC RA = 12 (July) *
Global Sales Operations = 10 (July) *
GBS Industrial = 184 (Aug)
Total = 10,425 *
Let me see if we play this back and keep all of the employee’s then what options does the business have. They can raise the cost of services and eventually be over priced in the competitive IT marketplace. Once that happens they could then apply for bankruptcy and then close the doors. Now how many people get affected. Then again lets look at the rest of the major industry and see if they are doing the same thing.It is always tragic when people loose there jobs but yet you don’t come back with a solution. I also wonder what you are doing about all of the people who are loosing their jobs in the news industry. I think you are just another hypocrite who is hyping up your article just to stir the pot and keep your own job.
.I.B.M. Profits Beat Wall Street Forecasts Sign in to Recommend
LinkedinDiggFacebookMixxMySpaceYahoo! BuzzPermalinkBy STEVE LOHR
Published: July 16, 2009
I.B.M. reported quarterly earnings that surpassed Wall Street’s expectations, but analysts cautioned against using its results to draw overly broad conclusions about the state of the technology industry.
International Business Machines has long been viewed as a barometer for corporate technology spending. And its second-quarter results, announced after the close of the market on Thursday, provided another encouraging sign for the technology sector. Yet I.B.M.’s performance, analysts say, is probably an indication that the company’s strategic steps in recent years are paying off, rather than a broad endorsement for the technology industry as a whole.
The signals were somewhat mixed earlier in the week as Intel, the big chip maker, said it saw evidence that the downturn had bottomed out, while Dell was far less optimistic.
I.B.M.’s earnings per share rose 18 percent in the second quarter, to $2.32, well above the consensus forecast of analysts of $2.02, as compiled by Thomson Reuters. Net income was $3.1 billion, a 12 percent increase from a year earlier, when I.B.M. had 4.5 percent more shares outstanding. The company has spent $3.5 billion in the first half of the year to buy its own shares.
But revenue was soft, at $23.3 billion, down 13 percent from a year earlier. Even after adjusting for the effect of a stronger dollar, which reduces the value of overseas sales, revenue was off 7 percent from the year-earlier quarter. That was slightly below Wall Street’s expectations.
Samuel J. Palmisano, I.B.M.’s chief executive, attributed the strong profit performance to the steady shift toward higher-margin software and services businesses and improved efficiency in recent years.
In a statement, Mr. Palmisano was upbeat about the company’s outlook for the year, saying I.B.M. was in a position “to make the most of current growth opportunities as well as those that emerge as the economy recovers.”
The company raised its profit forecast for the year from $9.20 a share to “at least $9.70 a share.”
Recent Comments from the glassdoor.com on working at IBM:
Poignant I’d say and contradicts those who say its only business-clearly they still have a job.
IBM – “Just say “No!”to IBM”
18 of 18 people found this helpful
Sep 17, 2009
2009-09-17 10:24 PDT
1.0 Details
Fairness & Respect 1.0
Compensation & Benefits 1.0
Work/Life Balance 1.0
Career Opportunities 1.0
Recognition & Feedback 1.0
Senior Leadership 1.0
Employee Morale 1.0
Communication 1.0
Disapproves of CEO IBM Anonymous: (Past Employee – 2007)
Pros
Unless you’re one of the executives who are currently draining the company of every dollar possible in order to enrich themselves at any cost – there is not any good reason to work for IBM. That is unless you have absolutely no other alternative.
Cons
No work / life balance. No security. IBM is a dead-end for anyone except the execs that are currently draining the company dry of all it’s resources.
Advice to Senior Management
Shame on you.
Sep 28, 2009by Another ibmer that will probably be RA-ed soon.:
Boy..I couldn’t have said it better myself. Dead on! No regard for any of their workers. Even less regard for their customers. As long as the customers keep paying out, IBM will continue to sneak sub-par service to them.
The company has trimmed its U.S. workforce. According to its annual report, IBM had 398,000 workers worldwide at the end of 2008, up from 386,558 at the end of 2007. At the same time, U.S. employment has declined, to 115,000 at the end of 2008, compared with 121,000 a year earlier.
Quint, your numbers are off. Current number of people within IBM to include employees, contractors and supplementals within the US is 147,359.
Excellent article. Palicrappo has no idea what he does to all the families in the US. How about when i had to tell my kid I was laid off and he asked, “does this mean we are going to be poor?” Just remember Palicrappo, what goes around……
Technocrat, you speak strictly of spreadsheet numbers, the same flawed measuring stick IBM executives use to justify their actions. What are missing are the measurements of ‘efficiency’ of the global workforce (or lack thereof), the impact of losing employee loyalty and the impact on future business by the decline of customer satisfaction. It’s easy for IBM to reduce its operating cost by moving a job overseas, but what happens when that global staff proves to be grossly ineffective, taking twice as long to complete tasks, at an error rate double that of it’s US counterparts and with reduced quality. How is that measured? The simple answer is it is not. Eventually this short term ‘cost saving well’ will run dry and then IBM will be left with nothing but an inexperienced, albeit cheaper labor force and no fresh ideas on which to grow. Those who work in the trenches at IBM, as well as low and mid-level management and even some executives understand this. But Wall Street continues to look only at the spreadsheet and rewards IBM for this mindless gutting of the once talented IBM workforce.
disgustedbyitall sorry but you need to look at the real world. You may be assuming correctly but it doesn’t make the stock go up. If IBM is doing something illegal they’ll get caught. Other then that they seem to be running a business that is surviving in this economy. I don’t much care for what they do or how they do it. My main interest is to have them keep my stock inflated .
technocrat, I hope you lose your job due to some greedy sob like palmisano. disgustedbyitall, you hit the nail on the head.
No problem samthesam , if they want to get rid of me then I just move on. When given a lemon then make lemonade. The problem with you guys is you can’t shed the resentment and move on. For those that stay either adapt or move on.
Technocrat, IBM does and did have the lowest cost of services in the industry, the problem is the only way they have to drive the price of the stock up is to continue to drive revenue and growth at double digits as oppsed to settling for single digit growth. I have first hand expierence in the competitive market.
IBM has a fundemantal problem their go to market strategy is way off base. So when you have stale matted your own business the only thing to do is continue to cut costs. Yes IBM is feeding China and India to overcome the US as an economic power. Unless you played the part I suggest you stay out of the sand box, because you do not know what you speak! Your comment “you will move on if let go, So where do you plan to move China, India Vietnam at the hosting countries wages???
Great commentary. Our research as found that it is particularly difficult for people in their mid-fifties to find another tech job. There is and always has been ageism in technical and associated work like marketing and sales. So just how old are you technocrat? My guess from your callous rude and unsympathetic commmentary to a very real problem for families you show you have no people skills which will catch up with you someday. And you support the article supposition that wall street and company greed will be their undoing. IBM is not competitive in many of it’s markets- you can’t make a successful business on just cost cuts – Data General, Wang, Prime Computer, Honeywell Computer, Digital Equipment and many others prove that point.
Great feedback we appreciate your efforts folks.
Best wishes and regards
I guess we’ll just have to see how the business goes. If the exec’s are screwing up as you say and fixin the books then it will crash. No big deal just pick up and move on. With the stock hitting 128 today I guess it may be time to dump some. As to the callous and rude part it is all about street fighting. You learn to survive just like being in the service. Buy the time IBM goes out of business I’ll be long gone and enjoying life. Work now days is like robbing a bank. You get in , take as much money as you can and then get out. The big difference is with business it is legal. Take no prisoners and I’ve heard that before. Sam will be out in a year then you guys can dump on the next CEO. Pretty funny that you guys never get tired of complaining.
Technocrat-You truly are a IBM Corp. shill.
Does that mean you are a union shill? I don’t apologize for IBM . They do what they want and who they want to do it to. I could care less , they pay me and I enjoy my earnings. If/when they fire me I’ll just move on . Lets see what the earnings look like today.After all that’s all that counts.
Unfortunately if anyone wants to be associated with IBM , a change of mindset is needed. Employees should treat IBM as just a paycheck, while working keep an eye out for a better paycheck. Investors buy the stock if you like IBM’s direction , dump it if you don’t.
If your looking for traits such as loyality , work/life balance, and integrity don’t work for IBM.
Terrif input- keep it coming supports many of the views in that article I’d like to hear from more of you. regards and best wishes.
Technocrat – You, sir, are an idiot. “Just move on” is a 90’s concept. Where do you think you are you going to move to, WalMart? You act like the depression is over, just because the Street hit 10g.
The problems in the States now comes the mindset of just “tak(ing) as much money as you can and then get(ting) out”.
I especially liked your comment “Buy (sic) the time IBM goes out of business I’ll be long gone and enjoying life.” The lack of concern that people have for each other is astounding. It reaches from the top all the way to bums like you.
But don’t think I care that you are an ignorant child. As this depression deepens, I started investing in precious metals, specifically lead. So, when the last bubble pops, and you are on the street, I can give you a quick injection.
timeforrealchange. Thanks and god bless you and your family. You seem to be a bitter person and I would hope you get help soon. Take care
Speaking as someone who has had their life turned upside down by IBM. Let me review a few points that impacted me and my family
1. After being submitted and resubmitted for a job (if you dont understand the services piece on IBM for project managers, please do not comment, you have to apply for EVERY job that comes your way) I was told at 40 I was too old to work. The posting even included the following verbage “Looking for college aged student to groom”
2. After being laid off due to “job performance” My PBC was a 1 that year, tons of kudos letters from customers and project teams, with a utilization of 117%, I sued based on EEOC requirements. The moron attorney (wished to hell I never spoke to him) changed his aggressive stance, telling me to take my job back after IBM legal contacted him. I guess he never heard of a target on your back. I suspect that IBM legal paid him off to make this go away. Meaning take the package. Unfortunately, for me, I still believed that the core of IBM was good. BOY was I wrong.
3. I am currently being pursed by the IRS for tax related problems created by big blue, after many attempts prior to the layoff to get them resolved. I have been told by HR it is up to me to provide the documents to resolve this. However, due to a screwball company mandate that they Dept of Labor agrees with, if I provide the documents I am in violation of laws related to having what is considered company property even though they are my own personnel files that IBM themselves have, and deny having at the same time. So I pay an attorney monthly to sit on his ass while he looks for some loop hole to help me find a way to clean this up, in the meantime, the IRS is sending red letters now.
4. With the economy in such a nasty place, I had no choice but to return to big blue on a year contract to re-establish my network and to obtain a few more items from old project managers, and executives so I could build my employment portfolio. When I set my laptop up, my email address had not changed, ironic, perhaps. As I replicated (IBMers know what this means) I had 65 emails waiting on me. All of them were software approvals waiting my signature (from the project I was working on when I was fired/laid off whatever you want to call it) that had sat in my box for a year, the amount on these purchase orders exceeded 10 million dollars. I emailed my old manager who wanted me to approve this so they could count them as revenue for 2008. I got my current manager who I have a great past/present relationship with involved. She told him to stuff it, do it yourself, that this is a conflict of interest, he no longer works in this capacity. 3 weeks later he had all his employees re-assigned, and was no longer with the company. Perhaps, just perhaps, this was justice, however, to me, its yet another example of IBM sweeping something under the carpet, and covering the truth with as many layers of lies as possible. I cannot tell you how many meetings we had, before meeting with the customer to make sure our lies were in order.
Now if you think this is about “cutting edge” methods on doing business, wrong, its the execs who are lining their pockets on the way out the door, and in theory thumbing their noses at their kids and grand kids and screaming entitlements. Its time that this screwed method of doing business come to an end. Robert Moffat who was recently arrested for insider trading (yeah google that one) was quote in a share holders meeting as saying “if I wanted loyality (meaning loyal employees) he would get a dog” Speaking specifically to Technocrat, look around and open your eyes. You are nothing but a speed bump on the way to another .2% stock share increase. Wake up and smell the coffee, and don’t let happen to me, happen to you. You will be 40 one day yourself, and looking back the same way I am, and trying to clean up the mess that big blue gave you for your years of service and dedication.
Technocrat kinda looks like you have been told the facts.
More feedback from IBM employees or past employees is welcome.
Regards and best wishes
BRIC countries are Brazil, Russia,INDIA (not Indonesia) and China…..
Sorry for your troubles but you assumed that IBM was your friend. Can’t do that and now you have become one of the victims. As I mentioned if IBM wants to dump me for a .2% profit then so be it. Always keep your options open . Hopefully your bitterness will subside and you can focus on obtaining a better job. How’s that saying go , when given lemons ——-. Moffat is just another symptom of the times. He’ll leave and life will go on. Last time I got layed off I was out pounding the pavement the next day.You can’t dwell on the past and become negative. I wish you well.
To Technocrat : your attitude can be summarized as “life if full of assholes, we cant do anything about it, lets just focus on surviving and accept that the assholes have their reasons for being so”. I am really sorry for saying that this is pathetic, and such an attitude is a cancer that eventually ends up in changing people into walking meat bags for corrupted manipulators. We have to make a stand, and a stand starts with “addressing” the issue and rejecting the attitude – I cannot walk everyday seeing drug-dealers selling dope to kids and just look the other way saying that they “have their reasons – or LET US THINK WHAT THOSE DRUG DEALERS HAVE AS OPTIONS FOR MAKING MONEY : they are un-educated, so they cant get a job, they cannot do this, they cannot do that, so dealing in drugs is the PROPER BUSINESS CHOICE” —- SH*T, ABSOLUTE SH*T. What kind of logic is that ? There is no haorline between ethics and business, they should go hand in hand. I work for IBM since 25 years, and T.J.Watson had five basic ETHICS of the job deeply embedded into all IBMers’ minds, one of them was “Respect for the individual !!!” Where has that gone ? Was IBM unsuccessful at those time ? No, we were very successful and very profitable, and employess were very loyal and ethical, and we have ridden over downturns very somoothly. It was only when people LIKE YOU got leading management positions that we started to fire employees.
I am really sad, very sad, that people like you exist —-
and
I am very happy that people like the writer of this article “still” exist —
Met I think you need to read and understand why IBM changed. It appears you do not have a business background which if you did would enlighten you (read the history) as to why 1993 happened. It was a do or die situation brought on by competition. When you are the only game in town it is easy to CARE for your employee’s . Take a look around and see how many other large companies are giving out raises larger then 2-3%. It is nice to remember the old days but people seem to not realize they will never come back. As to the drug scenario (not a comparison) that is very simple. It is illegal so you seek them out and arrest them. If you are so holy then go out and take care of the drug dealers yourself. What IBM has/is doing is not illegal (except for Bobby). The next big awakening is “there is no ethic’s in business”. Also loyality went out the window after 93/99. Learn that and you will survive better. You also seem very bitter. Calm down it is better for your blood pressure and your family. Take care as life is short.
You will find this article an interesting follow up:
Greed, Scandal, and Lies are All Part of Massive Us Layoffs and Restructuring at IBM , URL : http://bizcovering.com/major-companies/greed-scandal-and-lies-are-all-part-of-massive-us-layoffs-and-restructuring-at-ibm/
It would be intersting to get feeback on that?
Best wishes and regards
Spirit , no big deal here. Typical article on greed which is across all industry. IBM is no different and to continuing to push the “respect ” past is a joke. How about an article on how the competition changed a monopoly. As to Sam he does what he wants to turn profit. If it is off shoring jobs then that’s the way it will be. As far as I know it isn’t illegal. The second part of the article is on Moffat. If he broke the law then throw him in jail. Regardless he is dead meat to IBM. We’ll try to keep this post going but I’m getting weary of it. Time to move on to another topic. How about how many people who got their collage degree through IBM. And how many children benefited from their parents working for IBM. It would be interesting to get feedback on that. Best wishes and regards
Technocrat, what a sad statement: The next big awakening is “there is no ethic’s in business”. Ethics is taught in all business schools and graduate programs. Your statement certainly shows your ignorance.
IBM has a large team of lawyers that spend their days finding the loop holes in laws and methods to skirt the laws, such as the Warn Act.
There are laws that protect US Jobs; however companies like IBM are being investigated for failure to follow regulations on H1-B visas.
Today’s problems are a result of “executives” without ethics. Just look at Wall Street and the global spiral impact of CDO’s.
I’m sorry to hear that you feel ethics do not belong in business. Perhaps you need to read the book Jesus Christ as CEO.
As an employee, all I can say is the article is on the spot. Here is what I feel… company makes cuts, take benefits away, outsource good jobs, little to no bonuses or raises, yet the company as a whole, doing great. All the glamorous news about stock prices, meeting wall street expectations, making it through the economic downturn… WHOOPDEEDOOO… what about the people who is doing the work?? I am as good as gone to be honest with you… sick and tired of this company who looks like for the executives and management, while the peons in the end always gets screwed over.
The story of IBM in the UK is much the same as in the US. I’ve managed teams in IBM for 10 years. My staff have seen their jobs outsourced to India relentlessly, despite the questionable quality of the resulting service. I am forced on an annual basis to give 15% of my staff a failed PBC (performance rating). I am being forced this year to put all these people (almost all good people) on PIPs, Performance Improvement Plans. At the end of their PIPs, people are liable to disciplinary action and dismissal.
Few people in IBM UK get a payrise. I have IBMers in my team, who joined the company at the turn of the millennium, who have NEVER had a payrise in the company. What was Sam earning in 2000? Significantly less that he is today, I suspect.
I have many IBMers in my team with decades of loyal service behind them, who are now having their final salary pension scheme scrapped. They are loyal, decent people, and have no recourse for “justice” in IBM.
IBMers in the UK meanwhile remain extremely busy. Headcounts ahve been slashed, but workloads increased. This leads to stress and illness in the UK workforce. I’ve lost count of the peopl I have seen broken by IBM.
At the same time, IBM has this year allocated $9bn to buy-back its own shares, to meet Sam’s pointless and artificial target of 10$ EPS. That tells you where IBM’s priorities lie.
Over 50 MPs (members of the UK Parliament) have signed a motion calling on IBM to reconsider its draconian changes to the IBM UK pension scheme.
IBM wasn’t always this way.
IBM does not deserve plaudits from Wall Street.
IBM has brought misery to Main Street in the US and the UK.
IBM is not the great company it once was.
IBM is greedy.
IBM’s has lost its moral centre.
If you work for IBM already, you know all this already.
If you don’t work for IBM now, don’t go there. To IBM you will be just a cost, not an employee. If you’re a bright undergrad/grad or an experienced professional, take your skills and enthusiasm to an employer that deserves you.
UK_IBMer -Well said. Based on feedback we have gotten. Think that something in the US as well needs to be done to control the life destroying strategies at IBM. We would love to get more feedback of this sort. Maybe if enough people learn about this something can eventually be done to control this problem. Wall Street ,Main street and the personal health and lives of people and their families never justifies letting this go on- and worse yet praising Sam P for the prision he runs in the name of altered profit.
Technocrat seems to be alone in his opinions.
Another article based on feedback: Tell Us How IBM Ruined Your Health and Ability to Earn a Living Due to Greed and Inhumanity
URL: http://socyberty.com/issues/tell-us-how-ibm-ruined-your-health-and-ability-to-earn-a-living-due-to-greed-and-inhumanity/
IBM is the worst company to work for, they do not give a crap about you and their customers. Can’t you tell as IBM shifts and sends the jobs to Manila, Egypt, overseas and the US government, President B.O. lets these criminals get away with this crap! I hope it blows up in your face Sam and your stock drops like a rock. The SEC should investigate all the Upper management criminials at IBM Corp, like Robert Moffat, insider trading, Robert was able to retire with his pension intact..What ever happened to IBM’s… Business Conduct Guidlines…Bull shit…. BCG is only for the little people not the IBM Exec’s.
You bunch of, lying,cheating, stealing theives. I hope you all burn in ” HELL”, when you die!!