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    Highlights for week ending November 1, 2003
  • Vault's IBM Business Consulting Services message board is a popular hangout for both legacy PwC and IGS consultants. Recent posts include:
    • Any comments? (by "noni66"). Excerpt: What do others think about last night's call re benefits? ... I guess IBM's ideal employee is a single person who can work long hours and not have to go home much. IBM will give you money if you don't smoke, and if you workout. IBM will give you 3 weeks vacation from the start but chances are you won't have time to take all of it. IBM's not a bad place to work in. On average, it's exactly that -- average.
    • Welcome to IBM - Mediocrity (by "ancientblueconsultant"). Excerpt: This is IBM mindless madness via mindless management at its best - outsourced to some mindless HR consultant - who is using mindless charts shared throughout the industry. IBM is no longer a family oriented company. You've confirmed that. Like every dying Fortune 500 company, they want young, impressionable fresh single meat to manipulate. The real smart ones won't fall for the dream and quickly move on once they get their entry in their resume.
    • Explanation (by "gloomy_gus"). Full excerpt: Productivity is king, where the more you're billable on a project, the better your utility rates are. So vacation is a catch-22: you need a mental break but your utility rates will go down. This concept is across most consulting firms, not unique to BCS. This isn't a conclusive list but here are some examples that are happening in IBM BCS, which lowers the quality of life: (a) No tuition reimbursement, which (to me) shows how little IBM BCS supports a consultant's knowledge development. (b) No compensation increases worth mentioning for the past 3 years. I don't know about any of you, but this has severely increased my bitterness score. I do great work (even all nighters, working on weekends) which has resulted in add-on projects worth millions for this new fiscal year. Instead of feeling pride, I feel like a chump for helping IBM make money. (c) Overwhelming perception that IBM BCS doesn't appreciate its employees (even though the greatest resource is its human capital). This list barely scratches the surface to explain the low morale and poor quality of life at IBM BCS, but these are my 2 cents.
    • "squirrelBlue" comments on what he sees wrong with IGS's treatment of its employees. Full excerpt:
      1. Only two weeks of vacation time. At PWCC and competition, entry level staff came in with 15 days to start with.
      2. High utilization pressures. I have a ton of vacation time (IBM + left over PWCC vacation days) but have not been able to use any of it this year because of utilization pressure coming from my RDM and Partners.
      3. Waning work/life balance. This is partly a result of (2), and seemingly in part to blatant disregard to having a life outside of Big Blue. The PWCC regional staffing model is long gone. So is the 3-4-5 travel policy (try flying from one coast to the other Sunday nights through Friday evenings). Your average project is much longer in duration now because consulting at IBM is tied closely to application management services and strategic outsourcing. 3-5 months used the norm, although working on a project for a year straight was not unusual. Now we are seeing consultants locked in with the same client for 2-3+ years. At that point, why not take an industry job?
      4. No AMEX card points. We are unable to participate with AMEX Rewards for our Corporate Charge Cards because IBM receives a 2% kick-back from American Express. This was a nice perk, and is one that continues at Accenture, Deloitte, CGEY etc. But not at IBM.
      5. No bonus program and rare raises... Despite performance and utilization. Granted the economy is hurting and the consulting industry is in bad shape, but IBM has made it clear that they will treat us like its hardware and software drones and has no intention to pay top dollar for its consultants salaries.
      6. Bleeding talent. It is difficult to learn, grow and excel when the best and brightest people in the company are angry, frustrated and therefore quitting their jobs
      7. Unhappy consultants. This is an addendum to the previous point but warrants one of its own. Everyone is so unhappy. No one feels like participating in team dinners or outings anymore. Folks are under appreciated and overworked. Our career paths have been road blocked
      8. Bureacracy and red tape galore. Want to communicate an idea up the ladder? Got a broken laptop? Have a question about your benefits? You will know what I am talking about when you try to resolve any of these issues. It's impossible at IBM.
      9. Nickel-and-dime expenses. When you are on the road 50 weeks out of the year and are forced to deal with cheap hotels (Marriott and Westin are a distant memory and the Holiday Inn now loves me), heavy-handed spending limits (but no per diems), and ruthless expense police, it is no wonder morale is so low around here,
      10. Lack of exciting work. Process, org change, finance and strategy work have been replaced with pure IT engagements at IBM. Although this is driven partly by the consulting industry and our clients, IBM seems to have completely scrapped all that is unrelated to IT consulting, servers, storage, software, etc.

  • "albanyblue2000" uses IBM's form 10K (submitted to the U.S. Securities and Exchange Commission) to calculate "IBM's ACTUAL medical cost per retiree." Excerpt: Bottom line: 1) IBM tells its stockholders, - and the S.E.C., that its cost for retiree medical benefits in 2002 was ACTUALLY $2376! And it tells you the number is $7000. 2) That number is down from the 2001 unit cost of $2869.


  • John F. Coffey, an former IBM manager who retired in 1994, writes an open letter to IBM CEO Sam Palmisano. Excerpts: I retired in 1994 and was formerly an IBM Manager. I had both been told and then told employees reporting to me that IBM Compensation was based on many factors including non contribulatory lifetime medical benefits. Employee's were told that salary was not to be taken as the most important factor because other benefits for the employee and family made up a Total Compensation Package. What has happened in the last 10 years has amounted to broken promises to the people who made IBM successful. When we retired, we did not expect IBM to renege on the promises it had made over our 30+ year careers. ... Many current retirees's never had the opportunity to build wealth through stock options, TDSP and other opportunities that are available today. I participated in TDSP but only for 9 years, stock options were never available. Consequently we relied on personal savings and company promises. For IBM to break those promises puts many retiree's in a no win position with little or no recourse. Returning to work is not even an option, we are discriminated because of our ages and too many jobs have been moved offshore by companies like IBM and many others.


  • Wally Van Dusen, a former IBM manager in San Jose who retired in 1994, comments on this year's increase in the cost of his retiree medical plan. Excerpt: The health insurance issue for me is now reaching critical proportions. Last year my costs were $38 per month, this next year, 2004, they will be $321 per month. The total cost aspect of the issue obviously hurts, but especially am I concerned about the skew to make my wife's health coverage disproportionately expensive. She was the one who worked at home raising the four children so I could work the long hours that IBM demanded. And now her health coverage costs essentially 3 times what mine does! Where is the logic in that? Inquiries I make of IBM only get the response that IBM is primarily concerned about insuring the worker, not the family. What a change from former policies! One of the reasons I took early retirement was I could see the direction Lou Gerstner was taking the company. Away from respect for the individual and their contributions and toward only the bottom financial line. As a financial analyst it is distressing to see this crass override of individual contributions in pursuit of the almighty dollar.


  • "justa_bean_counter" comments on the changes IBM has made to its retiree medical plan. Full excerpt: The harsh reality is that IBM no longer wants to support their retirees other than what they are legally required to do so. Your generation is the last generation to receive retiree health benefits (even though they suck). My generation will get a paltry promise of IBM monopoly money that I can use to buy their health plans, and when it runs out, it's over for me. My son's generation will not get any at all because IBM has announced they are terminating it on January 1 for all those hired after that date. No more. All gone. Why is IBM doing this to you? Greed. In the legal arena, retiree benefits are legally called welfare benefits and IBM is removing you from their welfare rolls as soon as they legally can. For every retiree that IBM removes, IBM's operating profit increases in tandem. Greed sucks.


  • Meanwhile, the upper echelon of IBM management appears to be doing well according to Yahoo!'s list of inside trades of IBM stock. Or, visit IBM's Report on Executive Compensation from its 2003 Annual Report which shows the total compensation of IBM's top executives (Palmisano, Gerstner, Donofrio, Joyce, Elix, Mills, and Thompson) for the years 2000, 2001, and 2002. Editor's note: The 2003 total compensation for these seven executives alone was over $600 Million. Also given on the IBM Report on Executive Compensation are details of the retirement benefits provided to the executive officers of the Company.


  • Morningstar's Ask the Analyst: Is Your Company Living on Borrowed Time? by Brian Lund. Excerpt: Can Companies Get Out of Their Obligations? The pension obligation represents contractual compensation for past service, so I should hope that it couldn't simply be eliminated. Many companies shifted from defined-benefit to defined-contribution plans in the 1990s, however. To do so, they took the current value of employees' pensions and made that the cash balance in the plan. But when IBM IBM did this in 1999, some savvy workers noticed that longtime employees were hurt by the change: Defined-benefit plans weight the final years of service much more heavily than the early years, so in effect their benefits were drastically cut. Employees with 15 to 25 years of service saw the value of their pensions fall by 40% or more. The employees sued IBM for age discrimination, and the IRS placed a moratorium on pension conversions. In July 2003, the employees won their case. IBM will appeal, of course, and similar cases are outstanding against AT&T T and Cigna CI, so the final word on these conversions is yet to come. ... It's easy now to view companies with pension deficits as victims requiring "relief" (in Washington-speak), but it's important to remember that the deficits represent a day of reckoning, not bad luck. The companies were able to pay employees below-market wages for years because of their pension promises. They were able to hold off funding in tough times because the payments were not imminent. They were able to fund plans at lower levels as the stock and bond markets racked up exceptional returns through the 1980s and 1990s and boosted the assets in their pension funds (which, incidentally, boosted corporate net income as well). Now, as discount rates reflect lower expected returns, it's time to pay the piper.


  • Raleigh News & Observer: IBM hiring shows shift in needs. Excerpt: IBM said last week that it could add about 10,000 positions next year, reflecting optimism the spending slump that has battered tech companies might be ending. But the announcement did little to ease concerns of some workers, who fear many of those jobs will be added overseas. And the hirings won't benefit people laid off from IBM in the past two years. In a quest to redefine itself, IBM, which employs 13,500 in the Triangle, has dismissed thousands with skills no longer in demand. It has sought workers with consulting, software and technical abilities needed for its transition to a services company. ... Still, some question how the rebalancing -- and the new jobs -- will play out. IBM, like other tech companies, has moved jobs to countries such as India and China where it can find labor cheaper. IBM's Global Services unit, for example, plans to boost its work force in India from 4,500, to 6,000 by March, a recent report by Merrill Lynch said. India has the world's second-largest population of technical workers behind the United States. A software code writer there is paid about a sixth of what one gets in this country. ... While IBM Chief Executive Sam Palmisano said the expected 10,000 jobs will be in "key skill areas," he didn't say how they will be distributed. A group trying to unionize IBM workers worries that many of the positions will be overseas and that the new hirings will fail to squelch U.S. layoffs. "To us, the announcement was a big smoke screen covering up what's happening with the outsourcing," said Lee Conrad, national coordinator for Alliance@IBM in Endicott, N.Y., which represents 5,000 of IBM's 315,000 workers. "Our concern is we're seeing a loss of IBM employee jobs here."

Coverage on H1-B and L1 Visa and Outsourcing Issues
  • Wall Street Journal: U.S. May Ease Entry For High-Tech Workers. Senators Seek to Circumvent Cap on Temporary Visas Amid Corporate Pressure. Excerpt: Senate Judiciary Committee Chairman Orrin Hatch (R., Utah) is pushing a plan to circumvent the 65,000 cap on so-called H-1B temporary worker visas by expanding exemptions, according to Senate aides familiar with the discussions. ... Advocates of liberalizing the visa program concede it will be a tough sell. Sparked by rising layoffs among U.S. tech workers, a backlash of American workers and labor unions has targeted the widespread use of the visas as a significant cause of U.S. job woes. They contend that U.S. companies often are replacing American workers with lesser-paid foreign workers. ... Another strong lobbying force on the issue is India, which supplies a majority of high-tech H-1B holders. India's National Association of Software and Service Companies, a New Delhi trade group representing 850 international companies, which hired lobbying firm Hill & Knowlton, is advocating a cap of between 120,000 and 130,000. Indian ministers have assured their parliament that U.S. diplomats have been urged to preserve the higher levels for the H-1B program, according to reports in the Indian news media. If link is broken, view Adobe Acrobat version [PDF--29 KB].


  • WashTech News: Indian Officials Claim Outsourcing is Good for United States. Jobless, Labor Activists Disagree. Excerpt: Member companies of the Bellevue, Wash.-based WSA, formerly known as the Washington Software Alliance, appear to have whole-heartedly embraced the practice of hiring foreign workers, either by bringing the workers to the United States on guest visas, or by sending the work offshore to countries like India and China. The WSA claims a membership roster that totals over 1,100 members and counts among its membership IT flagships like Microsoft Corp., Oracle Corp., and IBM. The panel gave its presentation to a small audience that numbered just over 20 sitting shoulder-to-shoulder in a cramped Days Inn meeting room just outside Seattle on Interstate 90. They presented figures that they say support their contention that outsourcing IT work to India is good for the U.S. economy. ... Just outside the door, however, about a dozen rain-soaked protestors marched and chanted in a storm that at times raged to monsoon proportions. Many, like Terry Morgan, were veterans of high tech, now unemployed. “The reason why there are so many of us unemployed is cost,” says Morgan, 45, a software engineer of 20 years whose resume lists companies such as Eastman Kodak Co., Boeing Co., Microsoft and RealNetworks, Inc. “You can’t beat cheap labor.” Morgan says the reason he and other unemployed IT workers cannot find work is that companies can hire foreign tech workers for about half of what they pay U.S. workers. That seems to be one point on which Morgan and panel members can fully agree. ... Singh’s statistics, however, seem to differ from those compiled by the U.S. government. According to the latest numbers from the U.S. Bureau of Labor Statistics, the unemployment rate in the information sector is 7 percent. And there is ample evidence that outsourcing is costing U.S. jobs, in both the service and manufacturing sectors. Documented cases at IBM, Microsoft, Bank of America Corp., and others show that IT jobs recently eliminated in the United States are being relocated to India. A Hewlett-Packard executive told Wall Street analysts earlier this year that “We’re trying to move everything we can offshore.” Forrester Research released a report last November that predicts that 3.3 million U.S. white collar jobs would migrate offshore by 2015.


  • WashTech News:CWA President Addresses Globalization, Offshoring. Excerpt: In remarks to the annual meeting of the Council on Competitiveness, CWA President Morton Bahr stressed that our country can ensure competitiveness and create good jobs for U.S. workers, but "government must act decisively to restore balance between overseas investment and outsourcing, and keeping vital industries in this country." "Unless government intervenes, globalization will result in a declining American living standard," he warned.


  • ComputerWorld: IBM's Palmisano says U.S. must innovate to keep jobs. Excerpt: IBM CEO Samuel Palmisano said today that the U.S. needs to step up the pace of innovation to help stem the flow of technology jobs overseas. Palmisano said that he expects 13 million jobs to be created in the next two years around the world, including in rapidly developing countries such as China, India and South Korea. "We are at a critical moment," he said. "Because if we're not careful, the U.S. will fall out of step with the new realities of innovation. If that were to happen, the innovators and risk-takers would go elsewhere. Because today they can."


  • TechsUnite: Silicon Valley Tech Worker Challenges Beltway Politicians. Excerpt: In many respects Natasha Humphries is the model Silicon Valley high-tech worker: bright, articulate and highly motivated. And now unemployed after her job was outsourced to India. But her willingness to testify before a House Small Business Committee hearing last week about high-tech jobs being offshored definitely does not show up in any company handbook. ... In Washington D.C., Humphries spoke passionately about the issues she and her fellow workers now face since their jobs were sent to India, and how this short-sighted perspective of companies trying to save a dollar today will have lasting negative impacts on the industry in the future. “It’s corporate profiteering at its worst, and that’s all it is,” Humphries said. “One reason I was so interested in testifying is that while corporations have their lobbyists, to have a private citizen tell their anecdotal experiences about what is happening from an insider’s point of view makes it really hard for them to refute your testimony,” she said.


  • Sacramento Business Journal: Oracle sends 175 Rocklin jobs to India. Excerpt: A different kind of export: Mark Zandi, chief economist for Economy.com, estimates that 995,000 U.S.-based jobs have been lost to other countries since March 2001, when the tech industry began to implode. Cutting costs became the formula for survival among tech companies; labor is a major cost, they found, that can be cut through job shifts overseas.


  • Reuters: Bank of America Steps Up Outsourcing. Excerpt: Bank of America is to take emerging markets outsourcing one step further with plans to set up an Indian subsidiary next year, enabling it to cut costs by moving more jobs offshore.


  • King County (Washington) Journal: Jobs going overseas in recovery. Excerpt: Two days from now, you'll be hearing economic news that won't seem right. On Thursday, when the government releases its official economic review of the third quarter, you'll be told once again that the recession is over and that the economy is in full recovery. Not only that. For the first time in several years, you might also hear words such as "blistering" or "roaring" to describe the rate of expansion.


  • Cincinnati Enquirer: Convergys opens two Philippine call centers.
This week on the Alliance@IBM Site:
  • Family and Friends of Deceased IBM Employees to Hold Reflection and Memorial Service. Excerpt: On Tuesday, November 4, 2003 at 8:00am families and friends of IBM employees who have died of cancer plan to hold a brief memorial service and reflection. The short interfaith ceremony will take place on the lawn in front of the Santa Clara courthouse at 1095 Homestead Road in Santa Clara. The first civil trial charging IBM with liability for the cancer deaths of its employees is scheduled to begin at 8:30am that morning.
  • Heard on the Grapevine - More resource actions in early November - IGS and 3 other divisions. IGS will have a major reorganization. Stay tuned....
  • More Heard on the Grapevine... IGS managers and HR had a conference call last Saturday - the target to send IGS jobs overseas has been raised to 60% by YE 2004. Have you called or written your congressional reps yet? Sample letters here.
  • See The Executive Rats! ... IBM Executives guilty of plotting to send jobs abroad and fire US employees! Read their own words on how you will lose your job!
  • Protections for Electronic Organizing. Excerpt: Whenever workers come up with a good idea for building solidarity, the bosses usually try to make it illegal. The development of electronic communications to strengthen the union is no different, especially when the workers are using computers at work to either send or receive union material. We have already considered some of the possibilities for getting out messages of solidarity through the workplace, using computers. The big question is-can we get away with it?
  • What is your issue at IBM? We'd like to hear from our web site visitors. Please submit your comments about employment at IBM, on why you visited this site, why you joined the Alliance, what issues are of concern at your workplace, how this web site has been useful to you, or any other related topic.
  • Why we need Alliance@IBM.
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This site is designed to allow IBM Employees to communicate and share methods of protecting their rights through the establishment of an IBM Employees Labor Union. Section 8(a)(1) of the National Labor Relations Act states it is a violation for Employers to spy on union gatherings, or pretend to spy. For the purpose of the National Labor Relations Act, notice is given that this site and all of its content, messages, communications, or other content is considered to be a union gathering.