Full story here:
http://www.pbs.org/cringely/pulpit/2007/pulpit_20070504_002027.html
Snippet:
Last year I wrote a series of columns on management problems at IBM Global Services, explaining how the executive ranks from CEO Sam Palmisano on down were losing touch with reality, bidding contracts too low to make a profit then mismanaging them in an attempt to make a profit anyway, often to the detriment of IBM customers. Those columns and the reaction they created within the ranks at IBM showed just how bad things had become.
Well they just got worse.
This is according to my many friends at Big Blue, who believe they are about to undergo the biggest restructuring of IBM since the Gerstner days, only this time for all the wrong reasons.
The IBM project I am writing about is called LEAN and the first manifestation of LEAN was this week’s 1,300 layoffs at Global Services, which generated almost no press. Thirteen hundred layoffs from a company with more than 350,000 workers is nothing, so the yawning press reaction is not unexpected. But this week’s “job action,” as they refer to it inside IBM management, was as much as anything a rehearsal for what I understand are another 100,000+ layoffs to follow, each dribbled out until some reporter (that would be me) notices the growing trend, then dumped en masse when the jig is up, but no later than the end of this year.
LEAN began last week with a 10-city planning meeting for Global Services, which wasn’t, by the way, to decide who gets the boot: those decisions were apparently made weeks ago, though senior managers have been under orders to keep the news from their affected employees.
I have friends that work at IBM, or maybe I should say now, had friends that worked at IBM, I haven’t spoken to them recently, they may be gone now.
I think many, if not all, of the US based Service companies are likely in the same or a similar predicament.
Cringely further says
LEAN is about offshoring and outsourcing at a rate never seen before at IBM. For two years Big Blue has been ramping up its operations in India and China with what I have been told is the ultimate goal of laying off at least one American worker for every overseas hire. The BIG PLAN is to continue until at least half of Global Services, or about 150,000 workers, have been cut from the U.S. division. Last week’s LEAN meetings were quite specifically to find and identify common and repetitive work now being done that could be automated or moved offshore, and to find work Global Services is doing that it should not be doing at all. This latter part is with the idea that once extraneous work is eliminated, it will be easier to move the rest offshore.
As I have said before, I think Asian outsourcing is going to kill our IT and it isn’t going to help the companies very much long term either but then they aren’t looking long term, they are looking at short term gains to increase stock price and pad the pockets of executives and the top share holders.
IMO, IT needs to work smarter with more automation, not find huge numbers of people on foreign third world or near third world soil who will work for dimes and pennies on the dollar. All using that cheap foreign labor is going to do is drive the true knowledge workers out of the business so that it will all go downhill and when it is absolutely necessary to have the really good IT workers to find the truly efficient methods of working.
The downsizing doesn’t surprise me, it doesn’t bother me “a lot”, it is probably necessary because we do stuff too manually and we are finding out it costs too much to do that. However, I would like to see intelligent downsizing, not sweeping downsizing of any “on shore” resources to be replace one for one or even higher ratios with cheap Asian labor to do the work manually. Doing this just time shifts the problem, instead of being today’s problem it is tomorrow’s problem, only there will be interest to pay as well then.
Use intelligent downsizing to cut the fat, this includes any deadweight management as well as deadweight I.C.s. Keep the folks who actually work intelligently. Those who automate things where they can, those looking for efficiencies regularly. Done in that way, we may keep the more expensive IT folks but we also get to keep our knowledge and IT intelligence.
Of course Cringely hits on another good point… “bidding contracts too low”. It seems the Services companies are so eager to get ANY business they will quote ridiculous pricing and then appear to be stunned when they can’t make any money and the customer truly does suffer with the poor to absolutely shitty service that they get for that horrendous pricing.
On the positive side, I will be retired before this completely screws our IT and probably don’t have to worry about my ability to be employed, but I tend to take longer term views on things whether I am involved in that future or not and this isn’t a good thing being done.
joe
One of my co-workers once famously told me, “when you pay peanuts, you only get monkeys”. That has never been more true. Coming from a consulting background, I can honestly tell you that the quality of the offshore work can really be horrendous at times (not always, but many times). I can also tell you that these very low quality resources (you get what you pay for) are massive time sucks on your high quality resources (read: expensive resources) which helps mask how bad they really are. When you offshore critical tasks, you have someone with very little skill running these IT tasks (infrastructure or dev), and they tend to just call the people that know what they are doing and take all their time. Since they are on your team, you obviously don’t want them to fail either so you help them… to your and your team’s detriment since you compensate for their lack of skills and then cause more work to be outsourced to lightly skilled people when management thinks they are working out alright. It really is a vicious cycle…
However, there is a time and place for it (I am NOT advocating a total stop). Any sort of tedious or mind-numbingly repetitious job is a good candidate for offshoring. Rather than pay a highly skilled person for these menial tasks (e.g. test script running), this is appropriate for a low wage, lightly skilled resource to cut their teeth on. Be wary of anything that requires critical thinking however, as they will just call your skilled resources and suck their time (costing you more than just having the skilled resource do it to begin with since you now are paying them both to do what one should be doing).
I know this sounds pessimistic, but in my experience, it really is like this. This is also not a knock on anyone in particular (country, firm, company, or otherwise). It really is true that you get what you pay for. Cheap == Low Quality.
I have this fear that 10 years from now all the IT workers in our late 20’s and early 30’s will be 40 something’s booted from our jobs and looking at a career change.
It is absolutely going to suck if this trend continues.
There are a lot of people that got into IT during the boom that need to go but a lot of good people are going to be hurt too.
I was exposed to LEAN for the last months of my employment with IBM. Fortunately for me, I landed a “real job” with a solid company. LEAN turned out to be a “GOAT RODEO”. The right hand definitely didn’t know what the left hand was doing… they had the teams (blues, jazz, rhythm, etc) all with their nice schedules and timelines… we were scheduled to fly to New York where we’d meet other team members, and learn the way that LEAN worked… well, after the first week or so, travel was cancelled, schedules were in a total state of confusion, no one quite knew what they were suppose to do. When I left IBM, things were still in a mess… I found it interesting too, that in my last team meeting (2 days before I left IBM), that another announcment of a Global Resource Action was made that would take place some time in September. Later one of my team members confided in me that they were going to persue a different career path that didn’t include IBM…
I find that IBM is way overweight in management, project mangagers who are worthless nags, and several layers of mid level managers who have no power or authority and basically serve as nags and idiots.