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Highlights—May 8, 2010

  • ZD-Net Australia: IBM to appeal union win. By Renai LeMay. Excerpts: IBM has filed an appeal and stay of determination with Fair Work Australia over the industrial relations tribunal's judgement that the technology giant negotiate with the Australian Services Union in good faith over worker rights. The union and IBM are at loggerheads over the rights of workers at Big Blue's Baulkham Hills facility — which has around 80 staff. Big Blue fought a running battle with the union and the employees it represents at the facility throughout 2008, with an eventual reconciliation being met for better conditions for the staff in October of that year. However, union action at the facility kicked off again in December. The union claims IBM plans to offshore jobs from the facility, as well as from a number of other locations such as Cumberland Forest, and a centre in Clayton in Melbourne. ...

    "As sure as night follows day, IBM is using the almost unlimited resources it has available to it as one of the largest and richest multinationals in the world to try and stop a group of its employees exercising their rights to collectively bargain under Australian law. IBM have not even seen the reasons for the decision — but they are still appealing it!" she said, noting the ASU would fight the stay and appeal. "IBM have already informed the ASU that they intend to announce that at least 20 per cent of these workers will lose their jobs as they scramble to put in place their offshore centre in China," she added.

  • InformationWeek: Global CIO: IBM Took 'Goldmine Of Taxpayer Money,' Claims Bureaucrat. Indiana cancels a $1.34B outsourcing deal with IBM and the always-ugly "disengagement" process has begun. By Bob Evans. Excerpts: The dirty laundry from a massive, $1.34 billion IT deal gone bad is being aired very publicly as the state of Indiana has cancelled the remaining seven years of a 10-year deal with IBM while Big Blue says Indiana still owes it $125 million, including a $43 million "annual fee" as part of a deferred-payment plan. Some of the expense items in that $125 million invoice have stirred the profound indignation from a very surprising source—politicians and bureaucrats—who generally think the only thing wrong with spending $125 million of other people's money is that it could have and should have been $1.25 billion. ...

    According to a news story in Sunday's Fort Wayne Journal Gazette, non-elected "advocate" working for the Indiana Home Care Task Force took particular umbrage at IBM's contention that the state owes it $9.3 million for computers and related furniture purchased by IBM as part of the wide-ranging contract. "Advocate" John Cardwell said the state failed to oversee IBM's expenditures properly: "IBM has already walked away with a goldmine worth of taxpayer money, and we've gotten very little out of it," he said according to the article.

    Selected reader comments concerning the above article follow:

    • I take offense at your "politicians and bureaucrats... generally think the only thing wrong with spending $125 million of other people's money is that it could have and should have been $1.25 billion"! Where do you get that notion? The money is all of ours, and I think they're very sensitive to wasting it. I'm sure all of them would like to put it to other uses than a computer contract, like schools or tax cuts. It is precisely because they feel they are not getting good value for OUR money that they are pulling the plug on the deal they made. Would a private-sector entity done any differently?
    • Please spare me your use of terms like "Bureaucrat" and insults to government. Government serves the people, and they do a lot better job than IBM or British Petroleum does. Unlike big corporate bully's, government exists to serve the interests of the people, not the shareholders. I read Info Week to help me understand the needs of my customers, not to give Bob Evans a platform for his right wing propaganda. Can we get back to talking about technology??
    • The two biggest companies we have IT contracts with are IBM Global Services and Sterling Commerce. They both ignoring us service wise and make us pay for every one of their own mistakes. These big companies are collecting because they have an extensive lawyers team behind them. As soon as you sign the contract, you lost.
    • Let's look at this from a different point of view. Indiana hires IBM, one of if not the biggest proprietor of sending jobs offshore that exists, to rebuild their WELFARE system for $1.34B. If it wasn't so sad it would be funny; talk about a self-fulfilling prophecy. I'm thinking out of the box here but let me see if I can take the first step at "fixing" the IN welfare system. How about step one you hire companies or staff that, I dunno, HAVE A WORKFORCE IN INDIANA!!!!! Maybe hire a couple people who have been laid off and get them out of the welfare system instead of shipping that job to another freakin country! I think its sad when private companies offshore, I think its completely wrong if the government does it with taxpayer money but the government doing it to fix the welfare systems? I don't even know what to call that abomination. Only in America!

  • eWeek: H-1B, L-1 Visa Program Overhaul Proposed by Democratic Lawmakers. By: Nicholas Kolakowski. Excerpts: A proposal by three U.S. senators would stiffen many of the regulations surrounding H-1B and L-1 visas, including an increase in U.S. worker displacement protection and restricting the number of H-1B and L-1 employees that certain U.S. companies could hire. While many companies in Silicon Valley have lobbied Congress to raise the cap on H-1B visa holders, many lawmakers have pushed back, arguing that the system is rifled with fraud issues. In 2008, a USCIS report found the H-1B program had a more than 20 percent violation rate.

    The parts of the proposal dealing with H-1B and L-1 visas are considerably more detailed: “This proposal also adds fraud and abuse protections for existing temporary high-skilled work visas,” the document reads. “It will amend current law regarding H-1B employer application requirements to: (1) revise wage determination requirements; (2) require Internet posting and description of employment positions; (3) lengthen U.S. worker displacement protection: (4) apply certain requirements to all H-1B employers rather than only to H-1B dependent employers; (5) prohibit employer advertising that makes a position available only to, or gives priority to, H-1B [non-immigrants]; and (6) limit the number of H-1B and L-1 employees that an employer of 50 or more workers in the United States may hire.” ...

    The proposal’s focus on L-1 visas includes a prohibition from employers “hiring an L-1 [non-immigrant] for more than one year who will: (1) serve in a capacity involving specialized knowledge; and (2) be stationed primarily at the worksite of an employer other than the petitioning employer.”

    Even as the United States continues to dig its way out from the wreckage of a multiyear global recession, the presence of H-1B and L-1 workers continues to be a point of contention for a number of critics within the tech industry, who see the visa program as riddled with problems and prone to loopholes that allow employers to import lower-wage technology workers under the guise of skill-set shortages.

  • Yahoo! IBM Employee Issues message board: "Re: Here comes the next step" by "big.bertha92". Full excerpt: IBM is a LONG LONG way to becoming 'employee friendly' again (if ever), it's a very toxic environment for the average U.S. employee. With off-shoring moving forward at a manic speed and U.S. employees having to train their replacements, I would say morale is at an all time low (and nobody cares). All areas have it bad, but US Administration is really the saddest place to be, as every employee knows they will be cut sooner or later.

    The executives should be ashamed of themselves, but they're not. Shame on you, Sam!!! I have a feeling Bob Moffat was the tip of the iceberg in regards to under-handed actions.

    The only place it hurts is in billable/customer arena, where valuable resources are leaving, and IBM has a hard time finding qualified replacements (the only ones they get are IBM India resources 'transferring over' and a sprinkling of professional hires. (University graduates want NOTHING to do with this company and who can blame them). Execs are finally realizing it pays to 'retrain' current employees in the hot areas and assign them to understaffed customer accounts. Finding Global Resources is becoming difficult too to staff these projects. The poor Resource Deployment Managers are getting beat up daily because they can't staff projects (and WHY is it there fault?)

    We need a clean sweep of the top layer of execs - a total restaffing or we will continue to see the horrible death spasms of the U.S. IBM Corporation. Another Resource Action in June? Sure, bring it on, bitches!!!!! Tom Watson is truly rolling over in his grave.

  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM Consultant in Southfield, MI: (Current Employee) “Consultant.” Pros: The 401k benefits are outstanding. The opportunity to do many projects in various areas are excellent. The opportunity to work in many different locations are excellent as well. Cons: You are the only person responsible for your career. Employees are just another number. The way promotions are handled are completely unfair. Do not expect to get raises. They do not develop their employees. They will lay people off if they do not have projects to work on. Advice to Senior Management: IBM Global Business Services does not value their employees. You are just another number to them. They do not have any interest in developing their employees. It has become a job shop. Their bench policy is a complete joke. If you spend some time on the bench you are let go
    • IBM Anonymous in San Francisco, CA: (Current Employee) “Love it or leave it.” Pros: Lots to offer if you produce and know how to work the machine, good experience to see how a company this large manages to move with the market. Cons: Internal processes can be brutal. offshoring internal processes to "centers of excellence" can be brutal. how do you like 60-hour work weeks, phone calls around the clock. Advice to Senior Management: Refresh the SVP staff. Close Somers and push executives back to sitting with clients. They will find it refreshing.
    • IBM Anonymous in Bangalore (India): (Current Employee) “Great place for technology, not for career growth.” Pros: Technology, the technology portfolio at IBM is pretty impressive and lots of folks work on cutting edge work. Cons: (In)Flexibility : Employees are no longer encouraged to work from home, as other people have mentioned as a plus point. Recognition, or lack of: Employees don't get rewarded for their hard work and are expected to continuously slog. (Non)Standard salary structure: This one is the bone of all contention for everyone working over here, as IBM pays much lower compared to other companies. Advice to Senior Management: Senior management needs to rethink its policy on employee retention, big time. Currently they are OK with experienced folks leaving and are ready to hire freshers. This mentality, only works for services industry, but not for company which wants to focus on its product portfolio.
    • IBM Sales in Dublin, County Dublin (Ireland): (Current Employee) “IBM In Crisis” 4 of 4 people found this helpful Pros Excellent portfolio of Products, both Hardware , Software and Services Cons The whole Sales process is a joke, rewards system invokes silod relationship between teams, The vertical matrix of Brands are too strong , blinkered in approach and unworkable. The middle / Higher management both in country and overseas do not understand current IT trends and have no idea of competition in Irish Manaket. Customer satisfaction is not on the agenda. Too much emphasis on cost saving / book keeping / compliance with unworkable internal meaningless processes rather than strategic selling to customers with focused solutions that will address customers needs and yield long term traction / revenue . Internal processes and billing system are a mess .Career path non existent for talented people as middle management unable to recognise skills required to help sell and manage the new opportunities / challenges of Irish enterprises. Advice to Senior Management Get back to basics, customer buy off trusted suppliers, suppliers have to earn that trust and delivering correct fit products and services of value. Designing process that make doing business a good experience for our customers. Strive to achieving high customer sat by delivering solutions on time, in budget with committed IBMers or loyal SI/BP's are basic building blocks for sustained revenue growth. We are surviving today by cutting employees salaries , reducing employee training , removing basic benefits , moving to lower cost locations and where we can Increasing customer annual IBM stream charges that will yield sort term profit growth but long term we are heading for a major waterfall revenue slide.
    • IBM Sales in Dublin, County Dublin (Ireland): (Current Employee) “IBM In Crisis.” 4 of 4 people found this helpful. Pros: Excellent portfolio of products, both hardware, software and services. Cons: The whole sales process is a joke, rewards system invokes silod relationship between teams. The vertical matrix of brands are too strong, blinkered in approach and unworkable. The middle/higher management both in country and overseas do not understand current IT trends and have no idea of competition in Irish market. Customer satisfaction is not on the agenda. Too much emphasis on cost saving/book keeping/compliance with unworkable internal meaningless processes rather than strategic selling to customers with focused solutions that will address customers needs and yield long term traction/revenue. Internal processes and billing system are a mess. Career path non existent for talented people as middle management unable to recognise skills required to help sell and manage the new opportunities/challenges of Irish enterprises. Advice to Senior Management: Get back to basics, customers buy off trusted suppliers, suppliers have to earn that trust and delivering correct fit products and services of value. Designing process that make doing business a good experience for our customers. Strive to achieving high customer sat by delivering solutions on time, in budget with committed IBMers or loyal SI/BP's are basic building blocks for sustained revenue growth. We are surviving today by cutting employees salaries, reducing employee training, removing basic benefits, moving to lower cost locations and where we can Increasing customer annual IBM stream charges that will yield sort term profit growth but long term we are heading for a major waterfall revenue slide.
    • IBM Senior Consultant: (Current Employee) “Like most major consultancies, an OK place to spend a few years.” Pros: Decent benefits relatively speaking. Interesting and skilled colleagues. Occasional travel can be fun (as long as you don't get a long weekly commute that lasts more than a year.) Cons: Your prospects rise and fall with your industry and practice area. Compartmentalization (oftentimes hard to try something new or get on a project of interest.)

      For the most part I agree with many of the reviews of IBM and other large consultancies on this site, which is that it's a body shop first and foremost and depending on your industry, skillset, and practice area, you either have a decent experience for a few years or find yourself feeling very limited in assignment opportunities. It all ebbs and flows with the times and business conditions. For practitioners (i.e., consultants), your livelihood is largely dependent upon 1) the ability of Partners and those doing sales/proposal work to win business in your area and 2) being politically savvy enough to have someone above you look out for your career. Oftentimes you have no control over either of the above which is what can make the experience extremely frustrating at times.

      I see two major problems with IBM's path forward in the States. First, it seems that every few years there's a decision to strategically enter a new business line in an effort to increase their footprint, which oftentimes ends badly. A few years ago IBM built up a Strategy and Change practice only to let many of these people go when the business didn't come trickling in. I fear this will be the same story with the company's new push in the direction of data analytics as well. Being a large company, the potential client field is pretty narrow and limited to other large organizations willing to negotiate a multi-million dollar service contract. The smaller, more boutique consultancies eat them for lunch with small and mid-size clients as they're able to offer far more competitive pricing and specialization. Government contracts aside, there's just not a ton of contracts they can earnestly compete for.

      Secondly, IBM has struggled to become a true consultancy and remains an IT solutions/systems integration firm at its core. The best opportunities are still longer term ERP projects or those where IBM has a long-standing relationship and maintenance contract in place. Without these, the whole GBS division wouldn't be sustainable. It is simply too difficult for a practitioner to survive and thrive on smaller, short-term contracts because you risk ending up on the bench for periods of time - all things that count against you. And if your practice isn't winning work for you to be staffed on, consider it warning of a gathering storm.

      In general, it's not hard to read the tea leaves. All of the company's growth is overseas in emerging markets and sales targets being assigned to most industries are completely unrealistic. From my view, this is only setting the stage for further workforce reduction plans so I think it's unwise for anyone to consider IBM as anything more than a stopover of 3-5 years in their career at most. If you get in at a good time when your particular industry or practice-area is doing well, you could have a few good years and work with some great colleagues. However, it's always a good idea to keep your eye on the business pipeline because when it slows down you should start plotting your exit.

      Advice to Senior Management: Better execution when entering a new business line. Either someone didn't do their homework when determining that a new solutions area is a good idea (e.g., strategy, data analytics) or the sales team is not doing its part. Both seem to be problems at times.

    • “Don't Work Here - Run If You Can.” Pros: Used to be a great place to work, but comparing with other IT companies, IBM stands solidly in the middle of the pack. Cons: Expense controls are out of control. The company is all about the next quarter profits. Senior management has two stories to tell: 1. To Wall Street Analysts: IBM's 2009 profits were the best in the company's history and we are on track to better last year's 2. To Employees: We have to maintain vigilant cost controls due to the current economic situation. Employee's morale is low or non-existent. The only reason people are not rushing out the door because there are no jobs out there and IBM management knows it. So they continue to turn the cranks. It's a depressing place to work. Advice to Senior Management: Do your company and your country a favor and retire before you bring both of them down with your incessant search to maximize profits at all costs.
  • Wall Street Journal: Recalculating the Cost of Big Layoffs. By Scott Thurm. Excerpts: Early in the past decade, when its sales fell 11% in two years, Honeywell International Inc. laid off 31,000 employees, one-fourth of its work force, canceled plans for new products and scaled back its global-expansion goals. Those actions "decimated our industrial base," Honeywell Chief Executive David Cote recently told the company's shareholders.

    During the recent recession, Honeywell took a different tack. The company's sales fell 15% last year, and its profits shrank 23%, but the diversified manufacturer used furloughs and benefit cuts to limit layoffs to 6,000 employees, about 5% of its work force. At the same time, Honeywell introduced 600 new products, including advanced industrial controls and fuel-efficient auto turbochargers. Now, with the economy seemingly on the mend, Honeywell is reaping the benefits of its choice. ...

    "You can't shrink your way into prosperity," says Wayne Cascio, a business professor at the University of Colorado, Denver. Mr. Cascio has studied how companies in the Standard & Poor's 500-stock index have performed over 18 years. His conclusion: those who cut deepest, relative to industry peers, delivered smaller profits and weaker stock returns for as long as nine years after a recession. The current recovery will test those findings because many companies made unusually steep and rapid layoffs during the recession that preceded it.

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  • Job Cut Reports
    • Comment 5/01/10: Regarding crowd sourcing - GBS is already "participating". They call it "Liquid GenO". They post requirements for some coding and it can be posted to either internal IBM or external people. People provide code and then it gets reviewed. If their code is selected, they get to bill their time if they are internal and I'm assuming they get paid (don't know how much) if they are external. Everyone one else who submitted code, but didn't get selected get nothing, they can't even bill their time. Doesn't this sound like yet another way to have less IT people? Why anyone would want to engage in this so-called "competition" is beyond me. -Getting sick of this-
    • Comment 5/03/10: Cuts in Canada today - gone by end of May. No numbers yet, but just got a call from a old friend he got the call from his manager this morning. -SleeplessInMarkham-
    • Comment 5/04/10: Another RA hitting today. Tulsa call center. Nobody is safe! get out while you can! -herewegoagain- Alliance Reply: Do you have any specifics? How many? Do you know any of the IBMers that got RA'd?
    • Comment 5/05/10: Cuts in Montreal, leftovers from last wave. Batch operations: 7; mainframe ops: 4; iSeries: 1; BCRS : 1. The sad thing is that IBM won a huge new deal the very same day and we need people for it. Then again I have seen that before, huge cuts on an account days before we need the people for new projects. -Canonymous-
    • Comment 5/06/10: I saw this headline (didn't read it): 'How IBM Aims to Tackle Childhood Obesity' and thought to myself "They lay people off so they have no money to feed their kids" -anonymous-
    • Comment 5/06/10: To -Getting sick of this-; IBM has innovation, it is called "Work for FREE". IBM has stooped so low that they tried to monetanize the open source software market and they collaborate college students and computer hobbyists to submit program code solutions free of charge. They could keep most of the code and use it anyway for free if their disclaimer is written good enough. How pitiful and low can a once great company stoop. Don't be surprised if you see them panhandling next to the homeless someday to compete for their last dollar. -Who-Da-Thunk-
News and Opinion Concerning the U.S. Financial Crisis
Minimize "It is a restatement of laissez-faire-let things take their natural course without government interference. If people manage to become prosperous, good. If they starve, or have no place to live, or no money to pay medical bills, they have only themselves to blame; it is not the responsibility of society. We mustn't make people dependent on government- it is bad for them, the argument goes. Better hunger than dependency, better sickness than dependency."

"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.

  • Washington Post: Big Money: Debunking the myth of the 'sophisticated investor'. By Heidi Moore. Excerpts: The truth is, there are no real lines dividing Wall Street and Main Street and Washington. They are all interconnected. Promiscuous federal subsidies to homeowners and low interest rates made mortgages and refinancing very popular. Unethical mortgage lenders wrote these terrible, no-money-down, no-documentation deals because they wanted the fees. Wall Street seized on the popularity of those products and churned out more bundles of mortgages to be packaged and sold to big investors. Goldman and other banks sold some of these securities and took some of them onto their own books, and many banks turned around and insured themselves against the failure of the deals by buying policies from American International Group. AIG loaded up on contracts to protect the investments, and when the housing market collapsed, AIG came up short without enough money to pay the contracts.

    The banks were caught empty-handed. To save them, the Federal Reserve cut interest rates to zero and ate the banks' poison: It bought with its own money $1.4 trillion of the remaining mortgage dreck; as a result, the Fed is now the least-capitalized bank in the United States and would not pass one of its own stress tests, although there isn't enough money in the world to bail it out if necessary. Besides that, the banks got the law changed so that they could keep optimistically boosting the value of these toxic mortgage securities still on their books, making their financial positions today look far stronger than they are.

    So while Wall Street is swearing up and down it was dealing only with sophisticated investors, in reality every single part of the financial system, from high to low, was involved. Taxpayers and investors lost money in the bailouts while the banks made a killing: They were paid by clients to do sloppy deals, then paid again by the government to clean them up.

    It's a top-to-bottom mess. So here's a radical idea: Instead of buying the notion that there's a difference line between sophisticated investors and the mom-and-pop variety, banks should tell the truth. To everyone. Wall Street is the factory for all the financial products in the United States, and you can't allow a factory to put out some poisonous products and claim the rest are healthy.

  • The Political Carnival: Chart: Rich getting richer, poor getting poorer. Excerpts: It’s always easier to grasp the overwhelming with a visual: The gap between the top 1% and everyone else hasn’t been this bad since the Roaring Twenties. Business Insider: “The rich are getting richer and the poor are getting poorer. Cliché, sure, but it’s also more true than at any time since the Gilded Age.” And by creating that kind of gap, the wealthy can create the America that suits them. Equality goes out the window, the ability to buy candidates is exponentially facilitated, and democracy as we know it, or rather knew it, ceases to exist.
If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

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