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Thread: weekend commentary ... boardroom decisions made but real world bad news yet to happen

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    Default weekend commentary ... boardroom decisions made but real world bad news yet to happen

    It's not only manufacturing companies that have been making and following 'globalized' future plans ...



    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."(snip)

    (snip)"Taking a pure business school approach to this news, it probably doesn't look so bad for IBM. What's wrong with a multinational corporation moving work to its own overseas divisions? Squint hard enough and it can even look like good management. Global Services IS overweight and inefficient. Something has to be done and the company has already considered (and apparently rejected) a range of options, right up to putting Global Services on the auction block.

    The problem with LEAN is that offshoring on this scale creates huge communications and logistical problems, doesn't generally improve customer relations, and won't save money for years without the parallel gutting of the pension plan.

    And it is just plain mean.

    This is a policy based on perception. Streamlining and downsizing look good to customers unless it is their project that is being chopped, because implicit in LEAN is that Global Services will be eliminating not just employees but customers, too -- customers whose contracts were underbid and whose projects may never be profitable for IBM. Maybe such axing of customers is necessary, probably it is inevitable, but it hardly has a ring of corporate honesty. Customers to be dropped haven't yet been notified, either.

    It is especially disconcerting for an action of this scale to take place at a time when many companies (including IBM) are complaining about a shortage of technical workers to justify a proposed expansion of H1B and other guest worker visa programs. What's wrong with all those U.S. IBM engineers that they can't fill the local technical labor demand? They can't be ALL bad: after all, they were hired by IBM in the first place and retained for years.

    What is unstated in this H1B aspect of the story is not that technical workers are unavailable but that CHEAP technical workers are unavailable. Lopping off half the technical staff, as Global Services is apparently about to do, will eliminate much of the company's traditional wisdom and corporate memory in an act that some people might label as age discrimination.


    The worst part of all is that nobody at IBM I have talked to thinks this can or will help the business. It will probably just speed up the death spiral."(snip)


    (snip)"It's not as if they will lay-off everyone on the same day. They don't do that because they would have to pay more compensation to the former employees.
    IBM has been actively hiring in India for quite some time now, With regional offices in New Delhi, Mumbai, Kolkata, Chennai and Gurgaon. and smaller offices in other cities. They also have major sites in Bangalore and Pune and now have an IBM research center in Delhi. The plan is to close at least one of its US based research facilities by 2010. They would never admit that because IBM research is considered the best of the best and beyond reproach."(snip)

    ~
    Last edited by Melonie; 05-05-2007 at 12:37 PM.

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