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    Highlights—June 3, 2006

  • International Herald-Tribune: India becomes the focal point for growth as IBM fights to stay on top. By Saritha Rai, The New York Times. Excerpts: Bangalore, India The world's biggest computer services company could not have chosen a more appropriate setting to lay out its strategy for staying on top.
    On Tuesday, on the expansive grounds of the Bangalore Palace, a colonial-era mansion once inhabited by a maharajah, International Business Machine's chairman and chief executive, Samuel Palmisano, will address 10,000 Indian employees. He will share center stage with A.P.J. Abdul Kalam, India's president, and Sunil Mittal, chairman of the country's largest cellular services provider, Bharti Enterprises. Another 6,500 employees will look in on the "town hall" meeting by satellite from other Indian cities.
    The meetings are more than an exercise in public and investor relations. They are an acknowledgment of India's crucial role in IBM's strategy, providing its fastest growing market and a crucial base for delivering services to much of the world. "A significant part of any large project that we do worldwide is today being delivered out of here," said Shanker Annaswamy, IBM India's managing director and country head, who presides over what is now the company's second largest worldwide operation. [...]
    In the past few years, the growth in IBM's work force in India has been remarkable. The number of IBM employees in India has grown to 43,000 (out of 329,000 worldwide, 191,000 in services) from 9,000 in early 2004, making IBM the largest multinational employer in the country.
  • BusinessWeek: IBM Wakes Up to India's Skills. The computer company is ramping up operations with cutting-edge projects while using more low-cost, high-value local labor. By Steve Hamm. Excerpts: The sheer speed of IBM's expansion in India suggests a mad dash to hire as many low-salary employees as possible in the shortest amount of time. The company's Indian worforce has gone from 9,000 to 43,000 in just two and a half years. But while low-cost labor is one of the main factors behind IBM's speedy ramp-up, that doesn't mean its Indian employees perform low value work. "We're putting the highest level of skills in India,"says Larry Longseth, vice-president of server systems operations at the company's strategic outsourcing unit.
  • CNET News: Apple hangs up on India call center. By Tom Krazit. Excerpts: An Apple spokesman confirmed that the company no longer intends to locate a call center in Bangalore, a hub for call centers in India. "We have re-evaluated our plans, and have decided to put our planned support center growth in other countries," Apple's Steve Dowling said. [...]
    Apple's technical support has generally received higher ratings than its PC counterparts. An August 2005 study conducted by the University of Michigan's American Customer Satisfaction Index found consumers ranked Apple ahead of other vendors, such as Dell, Hewlett-Packard and Gateway.
  • Yahoo! message board post: "New H-1B Visa Bill" by "ibm_slave". Full excerpt: Earlier this year, Sen. Arlen Specter (R-PA) included a plan to expand the H-1B temporary work visa program in the Senate's immigration reform bill. Perhaps indicating that the immigration bill is in trouble, a second bill has been introduced consisting of just the H-1B provisions from the immigration bill.
    This new bill, the Securing Knowledge Innovation and Leadership, or SKIL Bill (S.2691), was introduced by Sen. Cornyn (R-TX). It would increase the H-1B cap from 65,000 to 115,000 annually. It would also allow the cap to be increased 20% after any year the cap is reached. The bill exempts workers from the H-1B cap who have earned a Masters or PhD from an American college or university, expanding the number of H-1B visas even more.
    The SKIL bill has been co-sponsored by a number of prominent legislators, including Sen. Specter (Judiciary Committee Chair) and Sen. Frist (Senate Majority Leader). This level of support indicates that the leadership of the Senate, especially Republicans, is in favor of raising the H-1B cap dramatically. On the other hand, there is no companion bill in the House where some leaders have expressed skepticism about the program.
    Those who are worried about the H-1B program need to contact their legislators NOW to express their concerns. Over 200 high-tech companies have asked Congress to raise the H-1B cap. It will take considerable grassroots support to stop it.
  • Computerworld: IBM looks to Appalachian colleges for future IT professionals. By Todd Weiss. Excerpts: In an announcement today, IBM unveiled an educational partnership between its 2-year-old Academic Initiative program and the Appalachian College Association (ACA) that will bring $5 million in software, IT workshops, faculty training, technical services and discounts on hardware at the ACA's 35 two- and four-year liberal arts colleges and universities. [...]
    IBM will go to the campuses of the ACA's member schools in Kentucky, North Carolina, Tennessee, Virginia and West Virginia to hold the workshops, which will include sessions on such topics as IBM's DB2 database software and its WebSphere business software, as well as Linux, services-oriented architecture and other topics. The first workshop was held last week at Bryan College in Dayton, Tenn., where faculty members from the ACA's colleges learned the inner workings of IBM's Rational Software Architect development platform.
  • Raleigh News & Observer: Protester loses job at IBM. Costine says he's a victim of age discrimination; company denies any bias. By Anne Krishnan. Excerpts: The IBM employee whose one-man protests have been a fixture in front of the company's Research Triangle Park campus has lost his job. In the end, Brian Costine says he was a victim of the same practice he protested -- his employer's age discrimination against veteran workers.
    Costine, 51, had clashed with IBM since January over a negative performance review, part of what he believed was a systematic plan to get rid of expensive older workers. In March, he began picketing before work near the company's main entrance with signs criticizing staff evaluations, treatment of older workers and offshoring. He figured he had nothing to lose. After Costine refused to accept two severance agreements following the poor review, IBM put him on a 60-day performance plan in late March. It ended over the weekend. "Based on all the things that happened between my manager and I, I never stood a chance, no matter what I did," he said.
  • Cincinnati Enquirer: Fix pension system; don't dismantle it. By Charles A. Hinrichs. Excerpts: When you take your car to a repair shop, would you rather have the mechanic a) diagnose the problem and fix what was wrong, or b) dismantle your car, rebuild the engine, and then present you with the bill? Whether the problem is car repair or needed updates to federal pension law, the best approach is usually one that fixes what's broken and keeps what works.
  • Yahoo! finance board post by "thetrendsnotyourfriend". Excerpt: As it relates to IBM, the question is simple... Is Sam Palmisano deserving of a 29% salary increase when the stock has completely stalled (and is actually down) on his watch....while IBM employees get only 2% raises trying to execute Sam's failed strategy?
  • Yahoo! finance board post: "Riskmanagement" by "nvram01". Full excerpt: Exorbitant executive compensation effectively means the grunts - who mind you really carry the bricks for this company - get nickled and dimed to death. I can't order a lousy $2 screw driver to do my job, but these clowns get to sit on leather chairs, underperform, and get paid a king's ransom? Sounds like a great business model.
    By the way, you mentioned in one of your posts how some of those who had PBC ratings of 1 or 2 were taken to the exits. Quite frankly, I have yet to see or hear anyone get a PBC rating of 1. Ever since they added an extra level, now known as 2+, a rating of 1 is nothing more than office gossip.
    You know what else? When I first started, Variable pay for PBC rating of 2 would get about a 10% payout. Now, a rating of 2 will net you 4% at the high end. Raises you ask? I've been one of the fortunate ones, but many in my group haven't seen one in 4 years.
    But hey, the Execs. are doing a great job. Why not give them another 5,000 shares at $0 acquisition cost.
  • Yahoo! Finance: After Enron, Corporate Wrongdoing Still Thrives. By Ben Stein. Excerpts: What I kept thinking was, "Mr. Lay and Mr. Skilling, the people you were looting were men and women at your company who had their life savings in Enron stock. They were men and women who you passed by in the hall every day. They were the people who made your coffee and brought you your mail and parked your car. They were people who were proud to work at Enron and thought they were at a heads-up deal. They trusted you with -- quite literally -- their lives. They never did a bad thing to you, and yet you ruined their lives and their hopes. You sold Enron stock while telling them to buy it. You knew the company was a shell game, and yet you urged totally innocent people to buy still more of it for their retirement accounts. How could you look yourself in the mirror every morning?"
    Now, it would be nice if the Lay and Skilling convictions marked the end of this kind of fraud. The terrible part is that it's still going on in a huge way. Lately, investigative reporters at "The Wall Street Journal," aided by university professors, are discovering that top executives at some of the biggest companies in the nation are looting their companies in an almost unbelievably brazen way. [...]
    What I keep thinking is, "Isn't there ever enough for you guys? You're already rich in every single case. You already have immense corporate perks. Isn't that enough? Do you also have to steal?"
    An Insane Executive-Compensation Culture: In many U.S. states, if you rob a convenience store with a gun and get $40, you go to prison for 20 years and you should. If you sell marijuana and are caught three times, you go to prison in some states for life -- even if no one was really injured. If you're a black kid who steals a bicycle, you go to jail in many places.
    But what if you use cunning stock-option plays to unethically make hundreds of millions? Then, you get a Gulfstream Jet, ski chalets, and nine-figure bank accounts.
  • New York Times: Gilded Paychecks | Rewards. Guaranteed Big Bonuses Still Flow, Even if Bosses Miss Goals. By Gretchen Moregenson.
  • BusinessWeek: The Golden Years -- At Work? Not too long ago, the concepts "retirement" and "work" were basically opposites. Now they're starting to merge. By Ellen Hoffman.
  • Pensions & Benefits Weblog on ERISA, IRC, ADEA, OASDI, CMS, FASB, and Other Beneficial Acronyms: Still of the Opinion: Retire the Number $450 Billion. Excerpts: No, I still don’t believe that $450 billion number. And the more I see, the more elusive I find that fiction. Ultimately, absolute truth on it might give us a whole new meaning to the term “actuarial error.” But from what I can tell, $450 billion may be several multiples above even the high end of any reasonable range for the true level of current underfunding among PGBC-covered defined benefit pension plans.
    Two weeks ago, coming up on Memorial Day empty-handed of anything but ephemeral rumors of progress on compromise pension reform legislation and impatient with waiting for the appellate court’s crucial ruling on the IBM cash balance plan age discrimination controversy, I found opportunity for a brief rant against that $450 billion number, which is almost universally accepted on faith as the premise for caricature of a pension system in crisis, on the verge of collapse. Comment posted in response to my rant takes issue with my doubts: we won’t question the lack of substantiation for the number itself as long as it comes from an official Administration source, but we need to document proof if we take issue with it. Actually, much of my own frustration comes from the sheer void of hard evidence: the Administration demands from pension plans what they characterize as “transparency,” yet plays a poker-faced bluff when it comes to their own hand. But OK, fair enough: my earlier rant didn’t merely seek reason to believe, rather went on to express very strong disbelief, so it’s not altogether inappropriate to expect me to proffer somewhat more solid a basis for my opinion than the Administration cares to give for its number.
  • Yahoo finance board post "Re: It looks like it could be IBM's time" by "riskmanagements". Excerpts: Companies that sell off after beating earnings 13%, and have flat revenue are declining at the core and IBM cash flow is being generated not by revenue growth, but by reduction in benefits and cost cutting, a symptom of a company not growing but in slow decline.
    Companies that are growing show steady increase in revenues. Companies that are in decline rely on asset sales, cost cutting like layoffs, resource relocations to low cost areas, and reduction in benefits, to hold cash flows relative to compensation for lack of revenue growth and to allow executive compensation levels to stay at huge levels, and in come cases increase, e.g. the recent raise granted to Palmisano, even though Palmisano's " on demand" bet of the IBM farm on failed to increase revenue, revenues are flat and the company is not growing but retracting.
    The IBM Media PR spin department, and associated areas, that provide support to executives that sit in on analyst quarterly calls, and schmooze over "stuff" all of em IMO are experts at placing insulation over the rotting foundation, to reduce transparency.
  • New York Times: Shameless in the Senate. By Paul Krugman. Excerpts: The Senate almost voted to repeal the estate tax last fall, but Republican leaders postponed the vote after Hurricane Katrina. It's easy to see why: the public might have made the connection between scenes of Americans abandoned in the Superdome and scenes of well-heeled senators voting huge tax breaks for their even wealthier campaign contributors.
    But memories of Katrina have faded, and they're about to try again. The Senate will probably vote this week. So it's important to realize that there's still a clear connection between tax breaks for the rich and failure to help Americans in need.
    Any senator who votes to repeal the estate tax, or votes for a "compromise" that goes most of the way toward repeal, is in effect saying that increasing the wealth of people who are already in line to inherit millions or tens of millions is more important than taking care of fellow citizens who need a helping hand. [...]
    Who would benefit from this largess? The estate tax is overwhelmingly a tax on the very, very wealthy; only about one estate in 200 pays any tax at all. The campaign for estate tax repeal has largely been financed by just 18 powerful business dynasties, including the family that owns Wal-Mart.
    You may have heard tales of family farms and small businesses broken up to pay taxes, but those stories are pure propaganda without any basis in fact. In particular, advocates of estate tax repeal have never been able to provide a single real example of a family farm sold to pay estate taxes. [...]
    In the interest of stiffening those spines, let me remind senators that this isn't just a fiscal issue, it's also a moral issue. Congress has already declared that the budget deficit is serious enough to warrant depriving children of health care; how can it now say that it's worth enlarging the deficit to give Paris Hilton a tax break?

News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Indianapolis Star, courtesy of Blue Cross/Blue Shield Health Issues: Steel's plight jolted retirees. By Daniel Lee. Excerpts: The bankruptcies of steelmakers LTV Corp. and Bethlehem Steel, which employed thousands in Northwest Indiana mills, threw many people out of work. Now, a new survey tracks what happened to some of the roughly 200,000 retirees and their spouses who lost their health benefits in 2002 and 2003 as a result of those bankruptcy proceedings. About three-quarters of the retirees say they now have replacement health insurance, but many are not as happy with it, according to a survey to be released today by the Kaiser Family Foundation. [...]
    "You dream of a nice leisurely retirement where you could take a nice little trip once in a while," he said. "It's gone to subsistence almost." Most of those surveyed said they were able to find another source of health coverage after they lost their retiree benefits. About three-quarters, 74 percent, of respondents had coverage at the time they were surveyed, while 18 percent were uninsured and 8 percent did not provide information about their coverage, according to Kaiser. [...]
    Among early retirees and their dependents, half reported that they or their spouse returned to work in order to obtain health coverage. About one-fourth said they spend "a lot" of their personal savings on health-care costs or premiums. [...]
    "They feel really betrayed by the company," Gil, the Kaiser policy analyst, said of the retirees. "These are people who really did have an expectation, and they should have had an expectation, that they would have benefits."
  • Jim Hightower: Health Care Morality. Full excerpt: Contrary to the "contrived wisdom" of the Powers That Be, providing health care for everyone is not an economic or even a health issue – it's a moral issue. Notice that corporate chieftains and the the political elites all have the Rolls Royce of health care – while most Americans are trying to make do with a sputtering Yugo, and while millions of our people are walking barefoot. This crass inequality on such a basic human need is a moral abomination.
    How is it that the richest country with the most democratic ideals of any country in the history of the world has 45 million people with no health coverage and millions more with pathetic coverage? And how is it that We The People pay $1.2 trillion a year to a corporate health care complex (more than any other people pay) and rank only 37th in the world in the quality of health care we receive?
    The Powers That Be just shrug their shoulders and say, well, sadly, America can't afford a system of good quality coverage for all. Can't afford it? George W says America can afford the $1.2 trillion in tax giveaways he's bestowed on the wealthiest people in our land. He says America can afford the $300 billion in direct costs already shelled out for his war of lies in Iraq. He says America can afford the hundreds-of-billions of tax dollars being pocketed by drug companies and insurance giants through his boondoggle prescription drug program.
    Of course, our so-called political leaders don't feel the pain of America's corporatized and exclusive health system. The very politicos who say America can't afford universal coverage receive full platinum coverage for their families – courtesy of you and me.
    This is Jim Hightower saying... No public official should have even a dime's worth of coverage until every man, woman, and child in America has full coverage. For morality's sake, the president and congress ought to be last in line, not first!

New on the Alliance@IBM Site:
  • From the Sam's Raise Comment page. This comment page is for employee reaction to their pay raise, in comparison to the 29% raise that CEO Sam Palmisano received. Send us your reactions to, yet another slap in the face for IBM employees. We will post them as soon as we receive them. If you choose, please include in your comments; your location, job title, and years with the company.
    • Comments 5/30/06: I'm glad to see Sam got a 29.2% raise last year (*sarcasm*). I've now gone 3 years with no raise (I thought I was an exception, but hear about other employees in the same boat every day). All I can say is "WOW" considering my last raise was 3%. I've worked countless weekends for this company without any recognition from management. Just a honest "Thank You" would be worth something, but we can't even get that. This will be my last year with no raise as I'm picking up the pace on finding another job elsewhere. Many of us at the current location are doing the same as management continues to hire more staff in Kuala Lumpur and India. We have a saying in our select group that if we're still with IBM come December 31st, someone needs to give us a swift kick in the pants. -Anonymous-
    • Comments 5/30/06: For the second straight year I received a 0% pay raise and have been a 1 performer for almost all of my career. Amazing how Sam can get 30% I guess he needs it to top off his 97% salary executive pension plan. What a joke for 500K could have given 500 people a 1K raise. Just another CEO raping a company hopefully he will get what Ken Lay and the Enron crew received. -Anonymous-
    • Comments 5/30/06: A what? Raise? What's that? Maybe when I go in tomorrow my seat will be raised a bit higher. -Anonymous-
    • Comments 5/30/06: Raise? What's a raise? It's becoming a game now. 3 years without a raise yet my hours and work load keep increasing. Some of us are carrying the bulk of the load in our departments (sort of scary when a staff member says they're unsure if their laptop is case sensitive) -Anonymous-
    • Comments 5/30/06: My raise was 2%. I think that was a cost of living adjustment. Sam's cost of living jumped more than mine did, so he got a bigger COLA. -Anonymous-
    • Comments 6/01/06: Band 6--got the 3% raise in '03 that everyone got--nothing since. Outsourced here in 2001. Each year I hear the same old crap from my manager (on #4 now) about the bucket getting smaller. Perhaps I should just look for a raise on those missing people cards you get in the mail--I think I'll have a better chance... -Anonymous-
    • Comments 6/02/06: Palmisano is the only CEO that is so highly compensated for low performance. For 12.5 million he got last year you think he could pull asteroids out of the sky bare handed. Cost and skill shifting is the innovation that he knows. Sending mature business units to Third World sweat shops is all he can muster at his pay grade. God save us from these CEOs who sell out their own. I haven't had a raise in years but had increases in health care with terrible provider like Aetna which add to my cost by not paying bills. -Anonymous-
    • Comments 6/02/06: No raise in 3 years and I think I vomited in my mouth a little at the staged management speech about "I'm just disappointed in how little money we got this year for raises!" What a load of crap! Did they think we would believe they were sincere? The money was so little because of Sam taking his share for breathing. -Anonymous-
    • Comments 6/02/06: I haven't had my raise discussion yet with my manager, but I gave my 2-week notice yesterday anyway----I'm so fed up I don't need to stick around to be told how little my raise is (if I even get one). We already received the manager's speech about how "there just isn't much in the bucket this year". It's funny how every year they say that as if it is the exception, not the rule. -Anonymous-
    • Comments 6/04/06: Over 5 years 5000 jobs have been lost at IBM Greenock due to Palmisano's policy's. Many workers who are still working for IBM have not received a wage increase in over 4 years. This is how Sam "earned" his salary increase. I'm ashamed to call myself an IBMer in my local town and Sam Palmisano should hide his head in shame at what he has earned on the back of making loyal employees redundant for life, yes for life as there are no jobs in the Greenock area. -IBM Greenock-
    • Comments 6/04/06: IBM missed our corporate variable pay objectives (again) last year. The stock price is down. Tell me, why did Sam get a raise? -Anonymous-
    • Comments 6/04/06: I didn't get a pay raise this year because I retired at the end of March, with almost 39 years. I didn't want to hear the same sob story I had gotten for the previous 5 years without an increase. "There's only so much to go around, and these young people aren't making the kind of money you are." Sam Palmisano is a disgrace. As CEO, he has three jobs to do. He should: 1. Keep the stock holders happy. 2. Keep the employees happy. 3. Keep the customers happy. He has failed miserably at all of these. The stock has languished for years. Employees are unhappy. Customers are suing due to poor performance by IBM. Sam just continues to divest the company of talent and ability. For that, he should be fired, not rewarded. -Anonymous-
    • Comments 6/04/06: I listened to the speech managers give on how salaries are calculated for the last time. After my own research of salaries and benefits I’ve got a 40% salary increase by leaving IBM. From what I have found IBM is really on the low end of the scale. The people they claim to want to retain can and will move on to make significantly more outside the company, while those complacent with hanging on waiting for the big pay out from IBM will be all that remain. -Anonymous-
    • Comments 6/04/06: Gee, a raise? What's that? Can you refresh me what it is? I have forgotten what it is. The way things are going; when are the pay cuts coming, Sam? If half of the employees who received their 0% raise this year would join the Alliance, then things could have a chance to change for the better for employees. It's time to THINK TWICE folks NOW! -Anonymous-
    • Comments 6/05/06: So with employee morale a distant memory, fear prevalent, the idiots in HR now tell us that the salary plan is going to be based on where you work. Well Yahoo for them! Perhaps they didn't think through that the only place they will be able to hire is in high salary areas which will really drive up the salary costs, making parts of the country simply unable to hire new employees, as the salaries are too low, and have no chance of going up. So you live in NY, or CA, and your house value is going up 25% per year, and you get a 15% pay raise, good for you. Joy for the rest of us, house prices going down, no raise (or worse asked to take a cut), and prices here still going through the roof, gas, insurance, healthcare, daycare, etc etc. I think I'll stick to 40 hours per week for IBM, and get a second job for the additional time they expect me to work here for free -Anonymous-
    • Comments 6/05/06: If raises were effective 6/1/06 then why have employees, including myself, have not all heard yet, one way or the other, what their's is or isn't? Nice job again by IBM HR and management who apparently do not think this is a priority or even a common courtesy. -Anonymous-
  • Job Cuts Status & Comments page
  • From the General Visitor's Comment page:
    • Comment 6/01/06: To our very eloquent poster on 5/10 who described IBM from the mid 70's--tell your friends or anyone else you know who was dinged on PBC due to overtime to contact the attorneys group for the overtime lawsuit. A project manager friend of mine was recently dinged, but her stupid manager put it in writing as to why she was being dinged. Not working enough overtime.....Oh and since we are on the topic of employee surveys, spin that just a bit. We are told constantly that customer satisfaction is also part of the equation. In that same ding, the dumbass also told her that was no longer a concern, nor part of her measurements. What a fool, but what a break for her. At least she will have a vehicle to address this mess, unlike most of us who are just left holding the bag. -Anonymous-
    • Comment 6/04/06: I found it very remarkable that Randy MacDonald's "PBC 2 Managed Out" presentation (shown on this site) shows that employee morale in the "US Pension Group" is steady since the announcement. Either management is lying/deluding themselves, or people don't care, or they don't understand, or they don't expect IBM to treat them any better. It's hard to say which option would be the worst. For goodness sake, people, if you're chosen to take the pulse survey, please make sure to send a message. -Anonymous-
  • Pension Comments page:
    • Comments 06/02/06: Janet: I wonder if you could update us on any changes/developments in our pending Class Action suit. As I understand it, IBM has already agreed to pay a minimum of $320M to settle the suit and an appeal is pending that could substantially increase that number. The last I read, we expect some settlement or update in November 06. Is that correct?
      Janet's Reply: The settlement will be between $320M and $1.4B, based on the rulings from the legal appeals.
      Currently, we are waiting for the 7th district Court of Appeals to issue their ruling -- there is no time line they have to follow. Oral arguments were heard earlier this year. The ruling could come out tomorrow, or it could come out several years from now. Once the ruling is issued, the losing party can ask for an 'en banc' review, where all the judges in the judges in the 7th district Court of Appeals would review the decision. The losing party can also ask for the Supreme Court to review the case. There is not a right to either of those reviews, so they could be turned down quite quickly. If either group agrees to do a review, the process could be strung out by several years. The settlement will be distributed to class members after all possible appeals have been completed.
      The settlement stipulated November 06 as the earliest possible date that would happen; as of that date, IBM will have to start adding interest credits to the settlement pot until such time as the appeals finish and the settlement is distribute. There is no way to predict how long that might take.
      More information about the lawsuit is available at: http://www.allianceibm.org/pensionlawsuitfaq.htm. I last updated it in October 2005; not much has changed since then. If you would like to look at the briefs that were filed for the appeal or listen to the oral arguments, they are available at: http://www.ca7.uscourts.gov. The case number for Cooper v IBM is 05 3588.

Vault Message Board Posts
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:
  • "GTC is too tied up in itself" by "phooey69". Excerpts: The biggest problem the GTC has is that it's too tied up in its own affairs to be of great help to delivery. It is true what DM says...the GTC is supposed to develop software that supports the SO mission. However, as any application designer knows, this task is difficult when the developers do not have a working knowledge of the business at hand. Most of the GTC employees have never performed day-to-day administration work of the kind performed by the SO delivery centers...user administration, network and systems admin, help desk, etc. The resulting software shows this lack of experience in spades...while it fulfills the stated requirements, it's not REALLY what is needed or even wanted...by either delivery or the customer.
    Complicating the picture is the management structure. Over the past few years, ex-NASA employees have taken up key management positions within the GTC organization. (Keller, for example, was responsible for Space Shuttle software development at NASA.) As these ex-NASA people came in, so did the accompanying bureaucracy that they had at NASA. The GTC organization was transformed into a full-blown, SEI CMM-compliant software development shop. Multiple "control boards" were set up to manage different processes within the organization, with hundreds of flowcharts indicating flows between the different boards. Decisions that could be done with 1 or 2 people now take as many as a dozen people, and just as many conference calls.
    Do you really want to know why the price of things like Remedy-eESM bridges, etc. are so high? I'll sum it up:
    1. It takes too many people and processes to go from initial concept to finished output (working code that can be implemented).
    2. The number of people who really "know what is needed" for these applications are shockingly low. The basic notions are understood, to be sure, but none of the underlying details.
    3. Infrastructure-specific knowledge within the GTC is extremely low as well. The GTC is big on people who can "talk the talk", but "walking the walk" is another matter. Let's just say that it's one thing to sit on conference calls and pass around Powerpoint slides, and another thing to actually sit down and write software that works.
  • "So let me get this straight" Author: Dose of reality. Full excerpt: We have an organization that is capable of developing packages that will work perfectly to spec, are approved by a cast of hundreds internally, will be supported by a Library of Congress level of documentation, but will bear no resemblance to what the customer wanted to begin with, and will be delivered years after the market need originally surfaced?? It sure sounds like government work to me! Does the phrase "can't get out of our own way" mean anything to you?
  • "Lots of bureaucracy to go around" by "phooey69". Full excerpt: Lest anybody think that all the problems of IBM's SO business can be laid at the feet of the GTC...think again. There's plenty of bureaucracy and politics to go around. Each service delivery center has their own "process issues"...many of which dwarf the GTC in size and complexity. It's always been a goal to drive cost reductions through technology...it's probably an assumption in every SO deal IBM signs. However, it's been a major challenge to actually deliver on that promise. Sometimes the cost of a deal can truly be reduced, but often the cost just shoots up.
  • "No disagreement here!" by "Dose of reality". Full excerpt: All the problems at IBM can be traced back to two root causes - poor leadership and dysfunctional corporate culture. That's why organizations like BCS and GTC are focused internally, and don't have the right people in place to serve their markets.
  • "e-ESM" by "Frank_Reality". Full excerpt: e-ESM was a major disaster long before the first line of code was written. You start with an abominable, bureaucratic, management heavy process, you fail to get requirements from the primary users of the process (the people entering changes/problems), you kill off existing proven software that actually works, you make it as complicated as it possibly can be including requiring redundant and worthless data entry, then when it all is implemented, you refuse the fix any of the flaws (the damn thing still can't handle DST right) and you keep making promises and more promises that you never intend to keep.
    It is rolled out, the performance is hideous, it doesn't do what you really need it to do and the enforcers of the process think that dotting the i's, crossing the t's and spelling is far more important than ensuring the change is done correctly and in a timely fashion. Meanwhile GTC thinks it's such a great success. e-ESM is total stupidity piled on more stupidity topped out with arrogance and hubris.
  • "along the same lines" by "DM Bingham". Full excerpt: Here's a business story from today's Houston Chronicle, in a city severely burned by corporate criminality: http://www.chron.com/disp/story.mpl/business/steffy/3901392.html
    I'm thinking of Sam's quick closing of last month's Stockholders' Meeting. He can treat the employees like sh!t but he'd better not treat the stockholders so cavalierly. They'll withdraw their money and he'll never cash those recent options of his.

Selected Reader Comments from readers of the BusinessWeek Article Big Blue Shift:

The following are selected comments from readers of the BusinessWeek article Big Blue Shift. All comments are available on the BusinessWeek site by selecting the "comments" link at the bottom of the article. The following are selected comments:

  • Nickname: India_Techie. Review: If IBMers in the US are worried, maybe they can seek solace in the fact that IBMers in India are an equally frustrated and concerned bunch. IBM's sweatshop culture and policy of underpaying and exploiting Indians to do work shipped offshore is despicable. In India, despite a 60% + growth rate, IBM continues to pay employees far less than the industry. People are hired by the truckload, without any real jobs to do for months. A prime example is IBM's consulting practice. Consultants rake in more money than most other services, and bill at some of the highest rates. Yet they receive poor pay, paltry bonuses, and have no career growth. Yet they have the same skills and do the same work as their peers in the industry. Is that exploitation or what? No wonder IBM India is on a hiring spree. Some 40% of people who join the company leave in the first year. One step forward, two steps back? Date reviewed: May 27, 2006 4:42 AM
    Nickname: MikeECA. Review: Because IBM considers services can be broken down into a series of standardized processes and its sentient potential customers don't, IBM is doomed to long-term failure. Date reviewed: May 27, 2006 8:48 AM
  • Nickname: Andy. Review: Right on time! Another story of IBM reorganizing. Each one meant to be the end game. IBM has to reorganize at least once a year or it has an identity crisis. The reality? Management has demoralized its troops, they practice managed earnings, they've sliced the pension from people who worked under an implied contract for 20 to 30 years, they are being sued for it, and there is a huge backlash to globalization that is taking place in legacy economies. Sound like an emotional response to someone who is against globalization or IBM? To the contrary, I believe in globalization. Mr. Market always tells you how management is doing. IBM's stock is at the same price it was in 1998. Mr. Market votes no on IBM. The biggest problem is their management practices that have left them with an unmotivated, fear-driven workforce in the US and Europe where they get 80%-plus of their revenues. Date reviewed: May 26, 2006 1:25 PM
  • Nickname: Rajeesh Ramjalhada. Review: This is the reason productivity is down in the USA. Workers fear for their jobs at every turn. It is clear that companies like IBM would rather have 0 employees in the West. When they offshore jobs, they offshore the foundation of this country. It is not as if IBM is losing money. They are making billions and billions each year--all the while, laying off American workers and undermining the US economy. If one believes Osama Bin Laden is a threat to the USA, I say IBM is a much greater threat. Think about it! Date reviewed: May 26, 2006 2:40 PM
  • Nickname: Bubba. Review: IBM should have learned from the car industry that "racing to the bottom" on cost is a losing strategy. Making products innovative that customers want to buy is a winning strategy beyond the abilities of the current management team. Date reviewed: May 26, 2006 2:50 PM
  • Nickname: James. Review: It is sad to read about a once great technology company that the main corporate strategy is to create lower cost production human chain to gain a competitive advantage. Instead of mining and nurturing great minds, it resorts to increasing bottom-line by improving productivity (a.k.a. lower labor costs) to deliver value to its clients and shareholders. No wonder IBM is no longer considered a "Great Company." What happened to the motto, "Think"? Date reviewed: May 28, 2006 12:29 AM
  • Nickname: Blissex. Review: What IBM is doing is to provide essentially free capital to third world countries--capital used to train and teach business to its future competitors. All those Indians and Chinese that IBM is investing in will eventually leave to found or work for their own companies. The current generation of IBM managers is reaping bonuses for reducing costs, but at the same time it is funding the rise of a whole industry of competitors that will take over, as IT skills are easily acquired (the only tools needed are minds, books and computers). Date reviewed: May 28, 2006 3:30 PM
  • Nickname: malik. Review: IBM is not a preferred employer in India. All top-level engineers work in Indian companies such as TCS, Infosys, Wipro etc. IBM is known as a company where one can end his career. Reasons are: no clear leadership, lowest level work, no skills upgrade. IBM hires non-engineers a lot, whereas in Indian companies only handful of first class engineers. I don't see IBM as a threat to Indian companies as IBM recruits people which were rejected by Indian companies. Numbers, alone, can't put IBM ahead of Indian companies when IBM recruitment lacks quality! Date reviewed: May 29, 2006 5:59 AM
  • Nickname: Barb Review: Shades of Frederick W. Taylor! The new IBM sounds like a loathsome place to work. It's not the IBM of my grandfather, an early engineer. Our great minds need to find or create better places to go than this sinking, heartless behemoth. Date reviewed: May 29, 2006 10:42 AM
  • Nickname: Bubba2. Review: Emperor Sam Palmisano has no clothes! This article is not about innovation to win or cost reduction. It is about transfer of wealth from employees to senior management. IBM pricing just increased the "Armonk Tax" (allocation by 18% after 12,000 layoffs of front line employees.) Those savings were used to increase upper management's bonus by $1 billion. Pension cancelled for front line workers who took 30 years of lower pay to get the pension. This also is not a cost savings. Current senior mgt pension burden is $1 billion per year. Sam has hurt shareholders, retirees, and employees except for himself. He has no sense of shame. Date reviewed: May 29, 2006 8:11 PM
  • Nickname: Slavelabor. Review: I'm sorry, but everyone I have spoken to in the field who has dealt with this fine structure of third world labor Blue is putting together has found it totally incompetent, unresponsive, and impossible to work with. They will save some money up front, but when the contracts start getting ripped up, IBM will reap what it has sowed. Date reviewed: May 30, 2006 3:45 AM
  • Nickname: BMer. Review: I work in services in the UK. We have to deal with India on a daily basis. Blue chip clients would run a mile if they listened in to any of the disasters that we have to put up with due to "Communication Error." Best pay off your credit card now. Date reviewed: May 30, 2006 9:45 AM
  • Nickname: W3. Review: IBM put this link in their internal communications, and every IBMer is reading the comments and nodding. Open mouth, insert foot moment. Date reviewed: May 30, 2006 11:17 AM
  • Nickname: John. Review: Unfortunately, Bubba2 is correct. Palmisano's performance as CEO has been mediocre, yet he continues to rake in huge money. IBM should start their outsourcing at the top, not the bottom. IBM could find an excellent CEO in India to lead IBM for a fraction of Palmisano's compensation. Over his 4-year-tenure, the stock has gone down 20%. If anyone else performed like that they would be fired. The IBM Board of Directors need to get rid of him. While they are at it, they should force all the executives to have the same plan that they forced upon the rank and file. Date reviewed: May 30, 2006 1:08 PM
  • Nickname: Jim. Review: If IBM's execs had spent a tenth of the time trying to figure out how to improve its market share instead of how to screw their employees out of their hard-earned money, they'd move that dead stock price. Once they move all their jobs over to slave labor positions, then what? I guess it won't matter because by that time Palmisano and Moffat will be sitting back collecting their fat pensions. Pensions earned by driving a once proud, profitable company into the ground. So be it. If the offshoring of jobs was truly based on a skill and cost need, Palmisano's and Moffat's jobs would have been moved over to Bangalore long ago. Date reviewed: May 30, 2006 3:10 PM
  • Nickname: Bluto. Review: I recently needed to contact the IBM help desk for a problem I was having with one of my applications. I had to terminate the call without a fix as I simply could make out only about every fourth word that was being spoken. I tried again hoping to get someone with a little better English, but no success. IBM should at least try to have people with competent English skills for their employees talking to the public. Date reviewed: May 30, 2006 5:38 PM
  • Nickname: VM. Review: I was surprised to see India and quality in the same line. Since I have seen outsourcing to India, they do not possess the business maturity that is being let go in the US. As an insider it is all marketing to hide the real truth of low cost labor and low quality. Date reviewed: May 31, 2006 2:26 PM
  • Nickname: watsonsghost. Review: IBM is offshoring not only to India but to South America, as well. Employees must train their replacements and then lose their jobs. IBM, always secretive, does not tell the communities they do business in or even its own employees how many jobs are being lost and where they are going. Employees get piecemeal information, at best, until their job is on the line. It is up to employees to break this secrecy. Send job cut information to the IBM union movement at www.allianceIBM.org. The offshoring of jobs by IBM and other companies is simply dangerous for working people in America and our economy. Date reviewed: May 31, 2006 3:11 PM
  • Nickname: Sanjay Rao. Review: 1) Look at what is happening in the world around you (http://www.businessweek.com/magazine/content/06_21/b3985054.htm?campaign_id=search) 2) Imagine a weakening dollar and a static share price 3) Imagine a country whose housing stock is about to crash 4) Imagine a country that has offshored everything and has no consumers 5) Welcome to America of 2008 IBM is a corporation. In the USA corporations are treated as a "person." IBM is emigrating before it cannot feed its family. I suggest the USA take notice. PS. I am Indian and we are getting paid in £ not $ as we take losses on the $. We welcome IBM and any Americans from Armonk who would care to stay in this wonderful part of the world. For reading I recommend, "Who moved my cheese," a story that mirrors IBM's move today. Well done IBM. I am proud to work for you. Date reviewed: May 31, 2006 9:36 PM
  • Nickname: Bla-bla. Review: I could accept the argument that labor in the Asia is lower cost and therefore IBM has to move. But I have serious doubts that IBM can get the same level of skills and customer service. However, my point is different. As an IBMer I can say that IBM management above first line stinks. IBM could save much more to fix the operations and remove layers of managers whose job is only to slash lower levels and to tell the stories to the upper levels. Date reviewed: Jun 1, 2006 7:42 PM
  • Nickname: bubba4. Review: Our remarks should not reflect a century old attitude of 'no Irish need apply.' Our co-workers in India, Brazil, China, Argentina, Central Europe, etc. are fine and competent individuals, we will get used to each other. The problem is the black box of management above us. They have no accountability for their actions and their actions are to take money from us and give it to themselves. They have failed shareholders, retirees, and employees. You, each of you, do your research and nominate yourself for the board. Throw these bums out! Down with the Enron attitude at IBM. Date reviewed: Jun 2, 2006 1:10 PM


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