IBM to Cut Global Services Jobs, Send Work to India

By Donald Sears  |  Posted 2009-03-25 Print this article Print

IBM, according to the Wall Street Journal, appears to be slashing global services jobs in the United States while giving some of that work to IBM global services staff in India.

The number of layoffs in the global services unit is not known, and will be very hard to obtain. The WSJ couldn't get IBM officials to comment on the numbers.

IBM's labor site (Alliance at IBM/CWA Local 1701) has an alert for layoffs coming March 26, and has posted the following, which appears to be a copy of a letter regarding outsourcing from an IBM employee about a Hartford insurance account:

Starting next week several Hartford delivery teams will be working directly with fellow IBM team members from India to begin the second phase of our Global delivery solution planned for the Hartford account. The teams will be engaged in a multi-week effort to facilitate knowledge transfer to prepare for migration of specific work activities to global delivery counterparts later in 2009. Your continued support and leadership is critical to ensure our overall success and to ensure we continue to deliver high quality cost effective solutions that IBM committed to the Hartford. Please ensure you and your teams actively support this effort.

The labor site does not have the number of layoffs listed either.

What is known is that 4,600 jobs were said to be eliminated earlier in 2009. Some labor groups have been taking offense at IBM's layoff practices since the info had been coming out in dribs and drabs and appeared to be a tactic to avoid notification laws. Some claim IBM does this to avoid negative press while publicly saying that the company will "invest in its people." That's what CEO Sam Palmisano told investors during its earning report announcement back in January.

What isn't clear is whether these global services positions are part of that 4,600 number or not, but given that IBM isn't talking, you'd have to assume these are new numbers and must be coming as a surprise to employees. Here's some more info from the WSJ article:

IBM managers have been receiving training from human resources specialists on handling the layoffs, according to one manager involved in the process. Earlier this year, IBM sent notices of layoffs--often characterized internally as "resource actions"--to around 4,600 employees in its software, sales, semiconductor and finance groups, documents sent to employees in those departments show.

The global business services group is by far the largest at IBM in revenue and employment, with 180,000 professionals world-wide, according to an internal document viewed by The Wall Street Journal.

Earnings for IBM's fourth quarter were pretty solid (up 12 percent and forecasting profit and growth in 2009), and IBM, historically, has been a Wall Street darling continually driven to find ways to give investors one of the best tech plays out there (if not the best). And one way to keep that growth strong is to transfer work to Indian and Asian markets where labor is less costly.

One the one hand, IBM had nearly 400,000 employees worldwide at the end of 2008, which is huge number, and so 4,600 jobs shaved is a sliver. But like the AIG bonuses (which were a tiny percentage next to the $80 billion AIG owes U.S. taxpayers), a sliver of U.S. and Canadian jobs that is getting larger right now seems like a whole lot to many people when IBM is supposedly making money.

But why not disclose the numbers? Most companies are cutting back and seeing lower revenues these days, so why the secrecy?

I guess what the CEO meant was that he is investing in his people, they just happen to be giving more of it to folks outside the United States. |

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