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    Highlights—May 8, 2004
  • Linda Guyer reports on her impressions of the 2004 IBM Shareholder Meeting in Providence. Excerpt: Sam was trying to be pre-emptive on the globalization issue and mentioned how much money IBM spends on educating employees and the $25M "Human Capital Alliance" that was recently announced at the PartnerWorld conference. At this point I completely canned my prepared speech (I was speaking on behalf of Jim Mangi's resolution). I started writing something completely different, including the fact that the "Human Capital Alliance" has two problems: (1) the program is barely started, and virtually undefined, and will not be ready for people losing their jobs in the near future; and (2) $25M is a drop in the bucket for IBM. In fact I told one reporter I thought it was a PR stunt, in my opinion. I also said I wish IBM would step up to telling the truth and to do more to help employees who will be affected by offshoring. No one I know who is training their replacement has been offered any training, nor any other job. Where is the investment in future technology? Why can't IBM employees get internships in the research labs to learn the new stuff? IBM could be leaders in invention, instead of leaders in cost-cutting and dodgy accounting. Read Ms. Guyer's full report...

  • "ibmoptioneer" comments on how IBM's poor treatment of its employees may backfire. Excerpt: One of the interesting trends that Armonk must be worried about now is the fact that many of the employees they have treated badly are now client decision makers or influencers. This trend came home to me when a once loyal customer stopped buying IBM and moved to HP. When I went to find out why, I found out the CIO was ex-IBM, had been screwed on the pension and was bent on revenge. He wasn't dumb and just chose HP, he partnered with HP and got good deals, ever forcing IBM margins on installed equipment downward. He pointed out to me that in South Carolina, the son of a laid off IBMer had convinced an entire senior class going to various colleges to not buy IBM notebooks and get Dell instead. The fact that they are trying to muzzle the IBM dissent in the Annual Shareholder's Meeting by creating another meeting for retirees and active employees away from the press is a clear sign that our image as a brand is in jeopardy.


  • "ibmaccountant" describes what typically happens to the employees acquired by IBM Global Services as part of an outsourcing agreement. Excerpt: Your management is considering outsourcing its IT group to IBM. The group IBM uses to handle most of its outsourcing business is called Strategic Outsourcing (SO)with sales people under the industry units of BCS (Business Consulting Services). Both units operate under IGS, but the outsourcing units usually deal with a third organization for the delivery of services to the client. ... The first thing to consider is what they will outsource. It may be just operations, the network, the data center, call centers or application development. The data center may be outsourced in place (rare) or the equipment and function moved to one of IBM's service delivery Centers (SDC's). Any one or all of the above can be the case. If they announce the outsource, pay close attention to what they have decided to outsource. It may be that your area is not in the contract and therefore will not be touched for another year or so when IBM will try to grow the services revenue base at that client. Read full posting...


  • In a post similar to "ibmaccountant's", "madinpok" provides a detailed, balanced description of the IBM environment that new IBM Global Services employees will encounter. Excerpt: Overall, my opinion is that IBM tries to be right in the middle as far as what you can get in salary and benefits elsewhere. Where IBM used to be a leader in offering a good overall package, that is no longer true. The usual excuse from IBM HR over the last few years has been "we are doing this in order to bring ourselves in line with the rest of the industry." When you hear that, you should expect that they just reduced one benefit or another. I think that over the long term, IBM will offshore just about every job they can. This includes Global Services, hardware development, software development, manufacturing... you name it. It won't happen overnight, but will probably take 10 years or more for it all to happen. There will still be some IBM employees in the US in the end, but many, many fewer than there are today.

    If someone were to ask me if they should accept a job with IBM, I would tell them that it is not a terrible place to work, but they can probably do better elsewhere. I don't agree with a lot of what IBM is doing, but I understand why it is happening. We have an environment that places personal and corporate profit above all else. Unfortunately, the employees are on the very bottom of this priority list. That leads many to believe that a union is needed to give the employees at least some level of protection. Although a lot of people don't care much for unions, there aren't many other options. (Editor's note: This is a "must read"). Read full posting...

  • "ibmaccountant" comments on IBM Global Service's oursourcing business. Full excerpt: It appears the IGS outsourcing business to India is going South quickly when compared to the corporate expectations. This is primarily due to over inflated internal business plans and the sudden tepid/negative reaction of many SO customers to an India outsource. IGS SO is also having big project management and technical integration/availability issues in large deals. All this means is that IBM must cover up its ill-fated investments over there that were brought forth by the wildly speculative business plans of folks yearning for the "D" (director) level slots and make the resulting flawed executive decision making look acceptable to shareholders in the short term.

    I hear all managers in various sites are being forced to move any work they can to IBM India and lay off anyone they can to make the 2Q numbers look better. New hire actions are being slowed and deferred to verify why the work to be done by the new hires couldn't be done in India. This affects SWG, IGS (AMS and ITS), Server Group and TG. Managers have been told they must deal with India "opportunity" or its a "career limiting" move that will cost them their jobs. Numbers of "affected" I heard today for just IGS are in the 3K range. Happy International Workers Day...

  • Vault's IBM Business Consulting Services message board is a popular hangout for IBM BCS employees, including many employees acquired from PwC. Some sample posts follow:
    • "New expense policy is terrible" by "BigBlueBeast". Full excerpt: I'm really angry about the new BCS expense policy. For those who have not seen it, the policy states that many items that were previously reimbursable are now not eligible to be expensed. My specific concerns are (1) high speed data lines will not be reimbursable to client facing staff; and (2) cell phone reimbursement has a cap based on bands (band 7 = $25, band 8/9 = $50, band 10 = $100, executives = $150). I don't understand how IBM can justify eliminating broadband usage, when they just advised us last week that we were going to all be considered home employees going forward, not mobile employees. Most BCSers I know work from home when possible. At a minimum, on 5-4-3 projects (which is still a policy the last time I checked) most work from home on Fridays. High speed capabilities allow BCSers to be more widely available at different times of the day, which is especially beneficial when working remotely with people from around the world. I think it’s tremendously valuable to our clients, and a lot cheaper that paying for us to have hoteling cubicles available. Regarding cell phones, it's ridiculous to think that $25 or $50 is going to cover a cellular plan that consultants would need in order to conduct their jobs while on the road. Beyond the time just spent in transit, I have often been assigned space in client offices with either no phone access, or a shared phone in a conference room full of consultants. Why does IBM even care to institute these policies when cell expenses are most likely going to the client? Why is that lower bands have higher utilization targets, and therefore must be at a client site more often, yet they are reimbursed less than higher bands with lower utilization targets? This new policy is crap, and completely takes away any monetary increases from anyone that actually got a modest pay raise. I would go so far as to view it as another pay cut for most of us.
    • "Recipe for Boiling a Frog" by "Dose of reality". Full excerpt: 1. Fill pot with water. 2. Drop in frog. 3. Continue to pass propaganda to frog telling him how great things are in the pot. 4. Turn up heat slowly – tell him to swim faster to stay cool. 5. Convince frog that it is even hotter outside the pot. 6. Cook until lifeless; then eat or discard. Anger is the appropriate response. This is yet another pitiful attempt at indiscriminate cost side income management engineered by bean counters and HR to score points. Any pretense of decision makers setting policy with even a remote consideration of trying to maintain staff morale was obliterated a long time ago. Decisions are constantly being made in a vacuum, assuming that there will be no fallout from staff or clients. There is no incremental downside to them of piling more discomfort on staff. If you haven’t left already with the pay cuts, meager bonuses etc., you aren’t going anywhere. My advice – PROVE THEM WRONG!
    • "The Answer is Very Simple" by Joe Dirt. Full excerpt: Had a long talk about a month ago with my PA who told me the following: "BCS is looking to cut costs so they are going to classify everyone as a home employee". He went further to state why! In IBM, our IT support (e-mail and great applications like the on-line travel tool, BAT, PD Tool…the list goes on) is paid for by your BU to corporate and here are the costs: 1) Local Employee $15,000 a year; 2) Mobile Employee $9000 a year; 3) Home employee $2000 a year. He also stated that they were looking at cutting support for cable modem/cell/etc. I asked how can I be at home without cable modem as I had downloaded over 100 meg that very day? His comment was: “I hear you”. Bottom line is that cash is king and people are last in BCS. No other way to explain it! I just charge it off to the client (in disguise). Not much surprises me about the new BCS and I miss the old BIS more and more! I don’t know what group you work in but the only time I heard of the 3-4-5 was during the recruiting process…it is more like the 4-5-7 plan. I have not gotten the note yet but I will keep an eye open (in between my other job interviews)

  • Janet Krueger explains IBM's Future Health Account. Full excerpt: FHA = Future Health Account. It is a replacement to the promise of retirement health care benefits for those who were not within 5 years of retirement eligibility on July 1, 1999, but who were hired at IBM before Jan 1, 2003. (Those hired since then are promised nothing at all related to retiree medical care.) For each year of employment between age 40 and age 49, a virtual account is credited with some money on their behalf (I think it is $10,000, although my memory could be faulty), and relatively low interest credits are added to the virtual account each year. *IF* the virtual account is still in place when the employee reaches full retirement eligibility, then the retiree can use money in the virtual account to buy health insurance from IBM at whatever price IBM chooses to charge, for as long as the account lasts. Estimates have shown that in most cases the virtual account will be depleted after 3 or 4 years of retirement, at which point the retiree may continue to purchase health care insurance from IBM with real dollars.

    All of the documentation clearly states that employees never get a vested interest in the virtual accounts, and IBM can wave their wand and make them vanish at any time. Their is no trust account set up to accumulate money to back up these virtual accounts. The sad thing is, while employees covered by the FHA jealously look over the fence for greener grass, believing that current IBM retirees have it made, current IBM retirees are also being ripped off, as IBM has been doubling their co-pays each year since they started charging in January, 2000. Way too many IBM retirees now get a bill from IBM in place of their pension checks...

  • Reuters: IBM saw net 15 pct lower if it expensed options. Excerpt: International Business Machines Corp.'s (NYSE:IBM - News) first-quarter net profit would have been 15 percent lower if it had accounted for stock options as an expense, according to regulatory filings made on Friday. IBM's net income would have been $1.36 billion, or 79 cents a share, had it expensed options, according to a quarterly filing with the U.S. Securities and Exchange Commission (News - Websites) . As reported last month, IBM had net income of $1.60 billion, or 93 cents a share. At the company's annual meeting last month, shareholders of Armonk, New York-based IBM backed a nonbinding proposal urging the company to treat stock options as an expense. The vast majority of technology companies have argued and lobbied aggressively against such a move.


  • Washington Post: Benefits Bust. No Job-Paid Health, No Pension and More Time to Miss Them. Excerpt: The Equal Employment Opportunity Commission isn't always called upon to be so publicly Solomonic. ... But there it was, caught in the middle. The fact that the EEOC has been dragged into disputes regarding pensions and other retirement benefits -- deciding whether certain changes are evidence of age discrimination -- shows how inventive, or desperate, aging workers have become about hanging on to whatever benefits they can. After all, companies, at least those without unions, make unilateral decisions about compensation and benefits, reserving the right to make changes at will. And they have been making changes. ... What we're seeing is nothing less than "a redefinition or change in the whole social contract between employers and workers," said John Rother, director of policy and strategy at AARP. And "we are almost at a tipping point where enough employers are changing behavior that it becomes the norm." This is a fundamental departure from the worker-employer relationship standard in this country since World War II. The boom of the 1990s, and the consequent demand for labor, masked the pattern for a decade or so, and even made 401(k) plans look like the path to riches. But the economic slump that began in 2000 and the accompanying market plunge made the change starkly visible. And it comes just as the giant baby boom generation starts to retire. Driven by global competition and, of course, their desire for survival and profit, corporations are looking harder at their relationships with workers. If link is broken, view Adobe Acrobat version [PDF--36 KB].


  • Washington Post: SBC Withdraws Retiree Health Care Proposal. Excerpt: SBC International Inc., which is negotiating with its union, dropped a proposal late Thursday that would have required union retirees to pay partial health insurance premiums. Ninety percent of the union's members voted Thursday to authorize a strike as early as May 8 if a contract agreement isn't reached. SBC has 100,000 Communication Workers of America employees in 13 states who have been working without a contract since April 3. At the company's annual meeting in Columbus on Friday hundreds of workers marched with picket signs. "You're leading the fight for middle-class people and working-class people in America," talk show host Jerry Springer said at a rally.


  • Managed Care Magazine: Do We Really Have Best Health Care in the World? Experts, including many health plan medical directors, agree: We have a long way to go. Excerpt: It's essential rhetoric for both political parties that America has the best health care in the world. Bill Clinton said so when he was president and George W. Bush says so today. Republican Senate Majority Leader Bill Frist says we do, and Louisiana Democrat Sen. John Breaux, ranking member of the Special Committee on Aging, agrees. But do we? Like most tenets and all rhetoric, truth relies on definition. "It depends on what we mean by best," says W. Allen Schaffer, MD, senior vice president and chief medical officer of Cigna Healthcare. "If a person is fortunate enough to be part of an employer-sponsored health plan, he or she may have access to the best health care technology in the world. But the fact that we have so many uninsured in this country is a national disgrace." Indeed so, says Robert Brook, MD, director of Rand Health. "I don't see how we can say we have the best health care in the world when we have nearly 44 million people uninsured," he says. "Those people are dying from lack of health care." ...

    Collating that data, the WHO rated the United States 37th in overall performance, defined as "the best that could be achieved with [available] resources." We ranked first among surveyed nations in cost, both per capita and as a percentage of our gross national product. ... A more recent study was done by the Commonwealth Fund. Published in January 2004 and titled Mirror, Mirror on the Wall: Looking at the Quality of American Health Care Through the Patient's Lens, it compares our system with health care in four other English-speaking industrialized nations: Australia, Canada, New Zealand, and the United Kingdom. It used the quality criteria developed by the Institute of Medicine's 2001 report Crossing the Quality Chasm: A New Health System for the 21st Century: safety, effectiveness, patient-centeredness, timeliness, efficiency, and equity. All four countries scored better than the U.S. in every category, and the U.S. ranked second-to-last on measures of "patient-centered" care. We did, however, have the shortest waits for hospitalization and elective surgery, and placed second (to New Zealand) on prompt access to primary care physicians and specialists.

  • Workforce Management: Google Promises Richer Employee Benefits as the Company Goes Public. In an unusual "letter from the founders," Google's presidents talk about the value of their employees. Excerpt: At a time when many companies are looking for ways to peel back benefits to make their companies more profitable, Google founders and presidents, Sergey Brin and Larry Page, announced their intention to maintain and even enrich their unusual benefits program as they take the company public. "Our employees, who have named themselves Googlers, are everything," the two wrote in a letter that accompanied the company's IPO, filed Thursday with the Securities and Exchange Commission. "We hope to recruit many more in the future. We will reward and treat them well." Google, which won the Optimas Award for general excellence from Workforce Management in 2003, is well known for its generous employee benefits. In the founders' letter, Page and Brin told potential investors that those perks are here to stay.


  • Ceridian Connection newsletter: The "flip side" of productivity. Excerpt: Soaring productivity means employees are working longer and harder with higher levels of stress and burnout. This has significant consequences for employers. It's estimated that worker stress and burnout now costs the U.S. economy $344 billion a year. (2) Tired and overworked employees have trouble balancing the demands of work and family. Stressed and distracted workers have more unscheduled absences and higher medical expenses. They file more workers' compensation claims, make more mistakes and create more waste. A 2003 Harris Poll found that 27 percent of employees say their morale is lower than it was the year before.


  • Jim Hightower: Greenspan's Social-Security Quackery. Excerpt: Greenspan's trail of quackery begins back in 1983, when he chaired a commission that persuaded congress to raise the Social Security taxes of working folks. This radical surgery was necessary, Alan said, to create a surplus to assure that future retirees would get the benefits they're due. Quaaaack. But instead of locking these surpluses away for future retirees, Greenspan left them open to raids by any president needing a quick pile of cash for a pet political project. The latest to make the raid is George W, who dove head-first into our Social Security surplus to pull out the billions he needed to pay for his tax giveaways to the rich. Greenspan himself told congress that such tax cuts were necessary to – believe it or not – prevent the buildup of government surpluses. Even though the bulk of the tax giveaways went to people making $300,000 or more a year, Greenspan promised that this would not harm working families counting on their Social Security benefits for their retirement. Quack-Quaaaaacck.

    Just recently, the quack was back, urgently telling congress that, because of out-of-control budget deficits, congress now must slash Social Security payouts "as soon as possible." He urged that every retiree's benefits be cut and that the retirement age be raised. Quack-quack-quaaaacck. In his 20 years of practicing economic voodoo, here's what the mad doctor has achieved: Working people had their Social Security taxes raised so rich people could have their income taxes slashed, which, he now says, means that working people must have their Social Security payments cut.

  • Jim Hightower: Subsidizing Drug-Company Gouging. Excerpt: As you know, the drug companies have been ripping off us consumers, charging exorbitant prices in the U.S. for medicines they sell elsewhere for half or even a third as much. Because of public outrage over this gouging, Bush and his congress had to look like they were doing something, so last year they rammed into law the "Medicare-drug discount program" for senior citizens. The program, which starts in June, is a bedazzling, convoluted, privatized shell game rigged with enough trickery to make a county fair flim-flammer blush. Start with the fact that, rather than simply stopping the price gouging, as other countries have done, Bush's program subsidizes it, putting some $139 billion of our tax money into the pockets of the drug giants each year.


  • Human Resource Executive: Executive Bounty. Outsized retirement packages and lavish perks may be losing favor, replaced by stress counseling and lifestyle coaching as companies retool their executive-benefit offerings for a new era.

Now on the Alliance@IBM Site:
  • Alliance@IBM has heard of job cuts in the IGS group at IBM, on May 3rd 2004. This affects regular employees and contractors. Contractors have faced numerous pay cuts over the past few years. For many contractors, pay has been cut 20% in the last two years. Please send any information to: endicottalliance@stny.rr.com


  • IBM Global Services Service Delivery Resource Action as of May 3rd, 2004, 224 employees cut from: Alpharetta, GA, Sterling Forest, NY, Southbury, CT, Schaumburg, IL, Boulder, CO, Poughkeepsie, NY, Rochester, NY, Endicott, NY, Phoenix, AZ, SSR's in NY State, SSR's in Tampa, FL, SSR's in Orlando, FL. (This list is incomplete).

Coverage on H1-B and L1 Visa and Off-Shoring Issues
  • PC Magazine editorial by John C. Dvorak: Scams, Lies, Deceit, and Offshoring. Excerpt: Someone has to take the jobs that, as President Bush and others say, "Americans don't want." There appear to be a large number of these jobs. In fact, it seems that our fastest-growing business segment is the creation of more and more jobs that Americans don't want. Often, American companies will lay people off, only to train newcomers to replace them. Here is how the real scam works. You are a programmer at one of the big IT or computer companies. You're 55 and nearing a retirement plateau; in fact, you're a liability. You're making, say, $80,000 as a program designer. You have various responsibilities. The company eliminates your position in the process of downsizing.

    To be fair to you, it creates a new position, Associate Program Designer, that pays $35,000 a year. Its responsibilities coincidentally match those of your old job. You can take this job, doing what you did before but at a huge cut in pay, or look elsewhere. If the latter, it's apparent that this new job is one that "Americans don't want." The company can then hire a "body shop" to drop in a foreign H-1B or L1 visa holder, who will not be quite as good but will work for a lot less. This is a bait-and-switch scheme that is designed to screw older and more experienced workers out of their retirement benefits, plain and simple. This sort of thing, unfortunately, is nothing new to corporate America: Every time I write about it, I get hundreds of e-mails from people who have been abused by such practices.

    The sinister nature of offshoring jobs has corrupted the highest levels of our nation. Hillary Rodham Clinton, for example, is directly involved with one of the big body shops, Mumbai-based Tata Consultancy Services. Bush is actively promoting the replacement of American workers. Colin Powell recently promised India that the administration would continue to promote offshoring. Which country does he represent, anyway?

  • WashTech: Indian Business Lobby Fetes Congressional Delegation. Democrats take outsourcing tour to India. Excerpt: In January, two of the most influential Indian trade lobbies subsidized a nine-day, five-city trip for a United States Congressional Delegation to discuss political, defense, health and economic ties between India and the United States. One of the main topics of discussion for the 11-member Delegation was India’s booming high-tech business and job outsourcing industry. The Delegation, comprised of 10 Democratic Congress members and one Republican Senator, was sponsored by the Confederation of Indian Industry (CII) and India’s National Association of Software and Services Companies (NASSCOM), groups which lobby on behalf of outsourcing work to India. For the entire story, visit http://www.washtech.org/wt/news/industry/display.php?ID_Content=4663. To view what the Indian Lobby spent on this junket, visit http://www.washtech.org/wt/ConfederationofIndianIndustry.php.


  • www.h1b.info: The H-1B visa program allows American companies and universities to import foreign scientists, engineers and programmers. Unfortunately, it has no serious safeguards to protect American workers from being replaced and is abused to provide cheap foreign labor. Moreover, H-1B workers continue to flood a terrible job market. During 2001 and 2002, 799,100 H-1B visas were issued and renewed despite a 6 percent national unemployment and 8 percent in Silicon Valley. The H-1B visa limits were set during more prosperous economic times but now can't be justified when so many highly trained Americans remain unemployed. Congress needs to increase domestic worker safeguards, significantly reduce the number of H-1B visas issued, and crackdown on visa violations and fraud.

  • CNET News: Shell taps IBM and Wipro in India. Excerpt: In another case of offshore outsourcing, oil company Shell has signed pacts with IBM and Wipro Technologies for information technology services to be delivered from India. The Royal Dutch/Shell Group of Companies made separate agreements with the two technology service providers in February, Shell representatives said Thursday.


  • Computerworld: Proposed bill seeks stronger privacy protection for offshore work. Consumer consent and corporate liability are key provisions. Excerpt: SAFE-ID proposes a set of privacy-related conditions that U.S. companies must meet when transmitting personally identifiable information to a foreign affiliate or subcontractor. Under the proposed act, companies could transmit such information to any country deemed by the Federal Trade Commission as having a legal system that provides for "adequate privacy protection."

    But companies will need to get specific consent from individual U.S. citizens when transmitting personally identifiable data to any country that does not have such privacy protections. The company will also need to disclose to the individual that the data is being sent to a country judged to be without adequate privacy protections. The proposed bill will hold enterprises liable for damages that result from "improper storage, duplication, sharing, or other misuse of personally identifiable information," by the foreign affiliate or partner.


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