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.

This is what happens when the world is run by MBAs. They have no idea about making quality products that people will want to buy, so they demand that you hit some number on a financial statement that makes them look good. How do you hit that number? Who cares. Firing people usually seems to work. The important part is the number, not what the company does or how it does it.

themuze: My girlfriend's father is the head of world sales for IBM Lotus, so these types of layoffs don't really effect him. As long as IBM has their Lotus software, he says that his job is fairly solid...the thing that takes a toll on him is that they continue to cut the amount of (qualified) people that he is allowed to delegate to. He works 24/7 and is constantly stressed. He makes a damn good living...but I don't know that kind of stress is worth it.

If his line of work means that more people have to use Lotus Notes, it's not worth it.

Indian Business Machines

Jaws_Victim: Ontos: GAT_00: Behold, the glory of the free market!

Yes. When business leaves the country due to high taxes and mountains of regulations, the obvious cure is to increase government influence on the market. That should pretty much fix everything.

Or... we could make it illegal for Americans to move business out of the country. Hell, why don't we just make it crime for Americans to leave the country and take their sweet, sweet, tax dollars with them?

Please. When I pay more in taxes than general electric, a multi billion dollar corporation, something is wrong with the system. Companies simply dont want to pay their fair share and the faux news watchers are more than happy to spring to their defense. If having a company in america is so goddamm bad that you just cant make a profit at all, get the fark out. We are all in it together and we either work together to see business and country succeed or you get out.

But IBM is not "leaving the country" because of high taxes or a mountain of regulations. They are leaving because of CHEAP LABOR. You can't compete with $12K per year degreed software engineers in Mumbai or Chengdu. Are they as competent...so far not even close. But throw six of them at the job for twice as long and then use the client for a beta test and it usually works out...for IBM. They continue to bill the client the same hourly rate but have the bonus of multiplying it by 6 because more folks are on the project.

John Nash: An article with no quotes, citations, or references. Seems legit.

And it's written by well known and insightful business analyst Robert X. Cringely, famous for his inside track on what's happening in the IBM executive suite.

That's the same Robert X. Cringely, IIRC correctly, who wrote this same BS about 5 years ago. Only that time, he predicted that IBM would be firing more people in the US than it actually employed. And when called out on this, instead of retracting he doubled down, saying that while his figures might be wrong "in detail", in principle he was right. Fast forward five years and it turns out he was... completely wrong. If you think you know anything about IBM, past, present, or future based on this article, you're an idiot. No two ways about it.

One of the oddest things about Fark is this: when people with no qualifications in climate science ignorantly criticize global warming, we rightly ridicule them. When people with no qualifications in economics trot out their ridiculously simplistic tax plans, we rightly ridicule them. But when people with no qualifications in global business management criticize how IBM goes about maximizing shareholder returns... we applaud them? Seriously?

Look, I know lots of you here dislike IBM. Some for reasonable reasons such as a dislike for offshoring (which, by the way, is a global inevitability); some for outdated reasons because you haven't updated your thinking beyond things that happened twenty years ago or don't understand how IBM decides whether to stay in or get out of certain businesses; and some out of purely personal animus. You don't like how IBM does business. We get that, and you're entitled to your opinion.

But you're not entitled to your own facts. And the facts are that IBM is doing very good business, and has been year after year, while all around it would-be rivals like BEA and Sun have been swallowed up, and HP has whiplashed from one CEO drama to the next. Get over it.

GAT_00: Behold, the glory of the free market!

Yes. When business leaves the country due to high taxes and mountains of regulations, the obvious cure is to increase government influence on the market. That should pretty much fix everything.

Or... we could make it illegal for Americans to move business out of the country. Hell, why don't we just make it crime for Americans to leave the country and take their sweet, sweet, tax dollars with them?

I was "laid-off" back in 2005 from IBM. It was a brutal experience. I have now come to understand the the Executives are no longer concerned about what will happen to the company but getting those 20-30% profit margins to add to their resumes for their next employer or retire with a fortune in retirement benefits.

It's almost a visual, to see the current management wringing the last $$ out of a dying company with virtually no care to what happens to it or the people within it.

I think the way of doing business that keeps a company strong is dead. That was the last generation's ideal. This generation gets as much as it can from whoever it can and moves on. We have no vested interest in the future of a company since retirement is now left in our hands. So our services go to the highest bidde and we get our services from the lowest. This is the world we now live in.

tlchwi02: SharkTrager: Most of the horror stories we tell are not about European coders

lets be honest, the horror stories we tell are about indian coders (or one of the surrounding countries)

although to be fair, i've had a terrible experiences with russian coders too.

in my experience, Russian programmers are giant flaming dicks, but they know their shiat.

Indian programmers... don't get me started. They are the main reason I'm considering leaving a $150K/year job.

Why'd they bother keeping the executives? There are other much smarter folks overseas who could run the company better and wouldn't demand as much ridiculously over-inflated compensation.

Great Janitor: The salespeople who end up getting laid off are the ones who get the highest commissions.

Worked for a company that did just that. Closed its doors 2 years later when all of the laid of salespeople went to work for competitors and stole away all of the most valuable clients.

GAT_00: Behold, the glory of the free market!

You know, that's about as insightful as your conservative counterparts shouting "Socialism!".

Anyway, FTA describes what happens when an organization's management becomes disconnected with the people they serve--their customers. This is a dying company. It may take another 20 years, but as long as the institutional culture has such parasitical management, it's a certainty.

IBM sucks and its screwing its customer in the consulting sector.

I was called in on a project that IBM had hired some beginner Indian programmers. I took one look at it and said, this program runs pretty slow doesn't it.

Just because you can write the programming instructions and eventually get the program to "work" doesn't mean your any good at your job and the product you produce is a piece of shiat.

IBM realized that they can keep their high bill rates while using very inexpensive consultants. Unfortunately for the customer, they are not getting IBM people working on the project, their getting random people off the street.

Just check DICE.com and see how many contracts IBM is trying to fill.

Magorn: I Think it's time for a 21st century version of the Davis-Bacon act: Any company that outsources more than X% of their workforce or deliberately re-classifies jobs to ship them overseas immediately loses all contracts they may have with the Federal Government. (or just say that ALL federal contractors must be US citizens or legal residents) As a company they are free to do what they want, but my tax dollars don't have to support them if they won't support American workers

Just wanted to say, THIS! It's time this country realized that a corporation and it's management can be as much of an enemy to the United States as a terrorist group is.

Like most large corporations, the upper management is only interested in what the stock price is at the end of the quarter. If they gut the company in the long run for short term gains, so be it. The hedge funds and institutional investors that couldn't care less what's left of the company in ten years make a fortune, the CEO, upper management and board make their fortunes; and the employees of the company are destroyed. Hey, America may go down in flames, but a few wealthy and powerful people are getting super rich. So I guess it all balances out.

jaytkay: Ontos: Yes. When business leaves the country due to high taxes and mountains of regulations...

Taxes are at their lowest in decades in the US. I know AM radio doesn't tell you that, but you can look it up.

And companies outsource because wages are a small fraction of what US workers earn.

True story - At a company where I used to work, I built a database and applications to automatically collect hundreds of contracts and price lists daily from our vendors, and feed it to all the people and systems in the company who needed the info.

When I left, instead of bringing in one person to replace me, they sent the work to the Philippines, where 20 people spent 10 hours a day manually typing the data into our system.

/ not csb

Clearly, the problem has to be your union. And your health insurance. And your unemployment insurance. And your living wage. And safe working conditions. And your insistence on a reasonable work day...

tlchwi02: SharkTrager: Most of the horror stories we tell are not about European coders

lets be honest, the horror stories we tell are about indian coders (or one of the surrounding countries)

although to be fair, i've had a terrible experiences with russian coders too.

Absolutely. And what's funny is the racism in US companies are most concerned about their ability to speak English. Somehow they assume that means they are competent to do the work.

One of my clients at an old job was the accounting department of Michaels. When they were bought by an investment group as a turnaround project one of the big cost savings measures was to outsource a lot of accounting to India. They paid $8/hr to the company doing the work with the promise of CPA level quality.

As one of the senior managers told me, when you pay $8/hr for an accountant you get $8/hr accounting.

Bad_Seed: This is what happens when the world is run by MBAs.

this right here is incredibly true. MBA's are great for doing the tax returns and keeping the books, but they should never be in charge of anything. they don't have what it takes to actually independently think.

Ontos: Yes. When business leaves the country due to high taxes and mountains of regulations...

Taxes are at their lowest in decades in the US. I know AM radio doesn't tell you that, but you can look it up.

And companies outsource because wages are a small fraction of what US workers earn.

True story - At a company where I used to work, I built a database and applications to automatically collect hundreds of contracts and price lists daily from our vendors, and feed it to all the people and systems in the company who needed the info.

When I left, instead of bringing in one person to replace me, they sent the work to the Philippines, where 20 people spent 10 hours a day manually typing the data into our system.

/ not csb

Gergesa: I have nothing against Indians on a personal level but I really wish companies would stop outsourcing to them for customer service. The accent practically ensures an extra 10-15 minutes tacked on to a service call as I repeat what was told to me to make certain I heard correctly.

No kidding. I was hired as CTO for a smaller software company. I had to force the Indian teams to write up progress reports because the US team (including myself) could not understand their speech. Nothing against Indians, but you need to realize your accent makes it hard for Americans to understand you.

Fark_Guy_Rob: Next, I expected my co-workers to be....well....stupid. I mean, that's what I'd always heard. A US company was outsourcing something - so, obviously, these would be crap developers, right? It was a very humbling experience, to say the least. They were every bit as smart as the US developers I'd worked with. Compared to my last US job - a perfectly average software company nobody outside of their industry would have heard of - my new co-workers are light years ahead.

To be fair, you went to Europe. Most of the horror stories we tell are not about European coders. I'm wrapping up a project coded entirely in India or by Indians brought to the US on contract. The coding is sloppy and the errors we see are ridiculous. They had worked for one other company in our industry and assumed that one man's preference was "industry standard" so they have fun things hard coded in to the system, like all reports spitting out in pdf's that are even set up so badly they can't be exported to Excel, but they look the way one guy wanted them to look, so they are right. They didn't even have the math right until we showed them the right formulas.

Hell, they actually used the phrase "it's not a bug, it's a feature" and meant it.

Ontos: GAT_00: Behold, the glory of the free market!

Yes. When business leaves the country due to high taxes and mountains of regulations, the obvious cure is to increase government influence on the market. That should pretty much fix everything.

Or... we could make it illegal for Americans to move business out of the country. Hell, why don't we just make it crime for Americans to leave the country and take their sweet, sweet, tax dollars with them?

Please. When I pay more in taxes than general electric, a multi billion dollar corporation, something is wrong with the system. Companies simply dont want to pay their fair share and the faux news watchers are more than happy to spring to their defense. If having a company in america is so goddamm bad that you just cant make a profit at all, get the fark out. We are all in it together and we either work together to see business and country succeed or you get out.

You can't keep eliminating 10-15% of your competence annually. At some point, you're going to reach a critical threshold beyond which your teams aren't going to be able to complete their projects on schedule without cutting corners. Many would argue that that point was reached in the mid-2000s. Fast forward to today and lots of projects are struggling to meet contract deadlines because the people who knew what they were doing were told to go work somewhere else.

So the employees/grunts and their first-line management clearly understand what's happening. In general, the second-line managers understand the problem because they also interact with the employees face to face. But the further up the management chain you go, the less dire the situation is believed to be because the contracts are still getting completed. There have been sporatic smaller project failures but folks in the trenches are waiting for the first major contract to collapse because the necessary skills were eliminated in a bid to cut headcount. It's just a matter of time before it happens. This year? Next year? It's going to happen.

The question on everybody's mind is...what's the fallout? Does management finally understand that the company needs to retain a certain amount of competency to be successful? The cynic in me says "no". So long as Wall Street remains happy, they're locked on a single course. They'll accelerate layoffs until the company consists of a handful of execs and a boatload of Watson clones.

GAT_00: Behold, the glory of the free market!

Yup. The market always wins.

When your government creates tax policies and regulations that make it too expensive to stay in your own country, you leave. It has always been a global market, it is just that in the past couple of centuries, with improvements in transportation and communication technology, it has been made so easy to relocate that consequences are starting to be imposed on the ones that made those stupid laws, rather than on their successors as used to happen.

It happened to China when techniques for silk production leaked out to other Asian countries, and again with Tea when Robert Fortune stole plants and smuggled them back to India.
It happened to England with industrial technology being smuggled to the American colonies.
It's happening to everyone now, with everything.

Knowledge and information is higly transportable, more so now than ever.

And new technologies, like information technology need no fixed physical location. A programmer can be anywhere, a server can be anywhere.

The old-fashioned 1950's era policies of most governments, including the U.S. and E.U., are showing their age. Unless new ideas are embraced, they will fall.

Hope they tank.

I get that it's reassuring to tell yourself that overseas workers are dumb and can't communicate and produce crap code. And there are lots of examples of outsourcing done badly that you can point to. 'Well, *that* air plane crashed, so clearly heavier than air flight is impossible!'.

I left the US to work overseas. I had visions of walking into a company with my American accent and good looks and showing everyone how we do it back home! A few months and I'd be running the place! But first, I need a job. So I started my job search.

First thing I noticed was the companies that were hiring. These weren't no-name US companies. These were big-name US companies. Google, Microsoft, Facebook, other less recognizable names that are leaders in their respective industry. I had no idea these companies had such a strong international presence.

Next, I expected my co-workers to be....well....stupid. I mean, that's what I'd always heard. A US company was outsourcing something - so, obviously, these would be crap developers, right? It was a very humbling experience, to say the least. They were every bit as smart as the US developers I'd worked with. Compared to my last US job - a perfectly average software company nobody outside of their industry would have heard of - my new co-workers are light years ahead.

Next, was the work ethic. I'm Europe. Lazy, socialist Europe. Where everyone works 30 hours a week, right? That's what I'd been told. But once again, I was lied to. Not only are my co-workers really smart, experienced developers, they are better workers. In the US - I'd walk up to someone and they'd be surfing the web for something non-work related. That was common. Sure, they got work done, but work was pretty laid back. Here - work time is work time. Most of my coworkers take 15 minutes for lunch (company provided) and eat/work at their desk. Even ignoring the extra lunch-time work, they are still clocking 55-60 hours per week.

I'm really not exaggerating. I actually pulled my boss aside to talk about the time expectation because my contract said 40 hours and I was doing closer to 50 and still showing up later and leaving before everyone else on my team. He told me some of them have contracts that stipulate more than 40 hours and some of them are heavily motivated by bonuses (some employee's annual earnings might be 50% bonus).

If you think you are better than outsourced developers - you are probably wrong.

A friend of mine is a contract employee for IBM. He holds one of the jobs that must be done by a US citizen and told me IBM is trying to change the classification of what he does so a non-US citizen can do it. He knows the second that happens he's gone.

When they did this with Global Services they lost a few major clients, and the revenue they'd provide, in a few months. Did IBM learn its lesson? Of course not. And it appears they're willing to flush the entire company down the toilet, which is what will happen.