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The Downfall of IBM
BetaNews.com ^ | April 27, 2012 | Robert X. Cringely

Posted on 04/29/2012 8:00:09 AM PDT by Daffynition

Reducing employees by more than three quarters in three years is a bold and difficult task. What will it leave behind? Who, under this plan, will still be a US IBM employee in 2015? Top management will remain, the sales organization will endure, as will employees working on US government contracts that require workers to be US citizens. Everyone else will be gone. Everyone.

(Excerpt) Read more at betanews.com ...


TOPICS: Business/Economy
KEYWORDS: corporations; ibm; ibmcorp; outsourcing; pensionplan; pensions
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To: justiceseeker93

Kind of sucks for the 150,000 people they’re getting rid of. And you do have to wonder about how things will be after 2015, laying off to prosperity works as a temporary measure but then you have the whole reduced work production thing. And it sucks for those of us that are going to be stuck competing with those 150,000 for jobs.


51 posted on 04/29/2012 9:44:59 AM PDT by discostu (I did it 35 minutes ago)
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To: Daffynition

Make or perish is the future for American companies. Without creativeness they will eventually slowly twist in the wind.


52 posted on 04/29/2012 9:50:35 AM PDT by ex-snook ("above all things, truth beareth away the victory")
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To: justiceseeker93
I happen to be pleased by what IBM has been doing: creating increasing value for its shareholders.

Judging by IBM's longstanding Smarter Planet campaign, it would seem that that "increasing value" comes from sucking off the public teat.

ML/NJ

53 posted on 04/29/2012 9:51:47 AM PDT by ml/nj
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To: ex-snook
... It must be because of Unions. No, wait, IBM doesn't have unions. Like in all such offshoring, it's not taxes, it's not regulations, it's the cheap labor, stupid.

Amen. It's CHEAP LABOR to boost quarterly profits. The h*ll with quality, customer service, long term viability of the company, patriotism, and ethics.
54 posted on 04/29/2012 9:52:51 AM PDT by khelus
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To: oh8eleven; All
Thanks for posting that stock price graph. You won't see too many Wall Street analysts singing along with lefty Cringely's dirge when it comes to IBM. Its PE ratio is still significantly less than the average for the Standard and Poor's 500.

The historical fact is that IBM was in trouble with its emphasis on mainframes back in the late 80s and early 90s. It succeeded in reinventing itself, which is very tough to do for such a large corporation.

55 posted on 04/29/2012 9:53:15 AM PDT by justiceseeker93
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To: eCSMaster

Ah, OS/2... I knew it well. We used to say that Microsoft was a marketing company that didn’t know how to develop software and IBM was a software development company that didn’t know how to market. Get Warped! Sheees..


56 posted on 04/29/2012 9:53:15 AM PDT by BigDaddyTX (Don't Mex with Texas)
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To: DManA

yes...they may be backing off...under pressure from the WH...after all this is election year...


57 posted on 04/29/2012 9:57:33 AM PDT by B212
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To: ml/nj
Judging by IBM's longstanding Smarter Planet campaign, it would seem that "increasing value" comes from sucking off the public teat.

You are correct to some degree. In the age of the government leviathian, it's virtually impossible for any large corporation to succeed without cozy relations with Big Brother.

58 posted on 04/29/2012 10:01:56 AM PDT by justiceseeker93
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To: Daffynition

Bump for later


59 posted on 04/29/2012 10:09:51 AM PDT by Senator_Blutarski
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To: justiceseeker93

Thanks for the stock tip.


60 posted on 04/29/2012 10:19:24 AM PDT by bigheadfred (MY PET TAPEWORM (OBIWAN) IS AN INSANE MILITARY HATING LEFTIST)
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To: An.American.Expatriate
Other way around IMHO. IBM products have become too expensive for the US Market, so customers are resorting to cheaper and, IMHO inferior, products.

I happen to disagree. The customers till have the same products, they are just seeking better and less expensive tech support. It is not the IBM products that have become too expensive, it is their after purchase services.

Their techs were not only required to provide service, but were required to become sales people as well.

A tech with an impeccable customer satisfaction record would be dinged on performance because of a lack of sales. I know this for a fact, because my husband went through it.

61 posted on 04/29/2012 10:19:57 AM PDT by Gabz (Democrats for Voldemort.)
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To: djf

I don’t think he ever worked directly for Big Blue. Iirc though he committed “suicide by schnapps” at a very young age.


62 posted on 04/29/2012 10:24:25 AM PDT by narses
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To: PapaBear3625
You can get around this by having the layoff numbers be under the threshold at any one time, moving people around, and spacing the layoffs in waves.
You really think IBM is going to lay off thousands and thousands of employees this way?
And, of course, no ex-employee is going to make any of the public aware of this?
63 posted on 04/29/2012 10:28:59 AM PDT by oh8eleven (RVN '67-'68)
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To: oh8eleven

Notice it’s scheduled to go over the next 3 years, and the public is already aware.


64 posted on 04/29/2012 10:29:52 AM PDT by discostu (I did it 35 minutes ago)
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To: Daffynition

IBM lost it completely when it ceded the consumer market to focus on what? While they still have a huge profit line, they are no longer a company that matters to consumers. Their name is not on everyone’s lips for innovation or design. Most people haven’t heard of them in years.

From the consumer point of view they sound more and more like “the world’s largest typewriter manufacturer.”


65 posted on 04/29/2012 10:30:20 AM PDT by yefragetuwrabrumuy ("God's light and God's life ooze over me like warm butter." -- Gay Episcopal Bishop Gene Robinson)
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To: ex-snook
It must be because of Unions. No, wait, IBM doesn't have unions.

"Alliance@IBM/CWA Local 1701is an IBM employee organization that is dedicated to preserving and improving our rights and benefits at IBM. We also strive towards restoring management's respect for the individual and the value we bring to the company as employees. Our mission is to make our voice heard with IBM management, shareholders, government and the media. While our ultimate goal is collective bargaining rights with IBM, we will build our union now and challenge IBM on the many issues facing employees from off-shoring and job security to working conditions and company policy."

66 posted on 04/29/2012 10:39:56 AM PDT by PapaBear3625 (In a time of universal deceit, telling the truth is a revolutionary act. - George Orwell)
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To: RightOnline
IBM rewarded automotons; clueless bureaucrats who understood process ... and could talk the talk. If you stuck your neck out, your head got chopped off.
I worked for Kodak for over 30 years. As flexible as a steel rod in concrete.
Their management was sooo inept they ruined a monopoly. But golly-gee-whiz, the workforce sure was diverse.
67 posted on 04/29/2012 10:42:42 AM PDT by oh8eleven (RVN '67-'68)
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To: DManA
IBM Denies Plan To Cut 75% Of Workforce

I competed with IBM for most of my 40+ year career in sales and in 1999-2000 was with a company that IBM bought.

Since I had many thousands of options in single digits and IBM payed $ 18, I have no bad words for Big Blue.

I left after less than a year because I had always sold for young, start up companies, with little structure and large commission rates, and so we didn't agree on the way I should be compensated.

But for a very large company, in my short employment there, I was impressed with senior management and the professional way almost all IBM employees acted.

Had I known that al queada was going to pull a 9/11 I'd have never left IBM, but with 20-15 hindsight, I'd have changed a few other business decisions that I made.

68 posted on 04/29/2012 10:45:48 AM PDT by USS Alaska (Nuke the terrorists savages.)
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To: justiceseeker93
it's virtually impossible for any large corporation to succeed without cozy relations with Big Brother

How's Apple doing?

Even Microsoft keeps its distance so far as I can tell.

IBM sucks up. I hope they die.

ML/NJ

69 posted on 04/29/2012 11:01:27 AM PDT by ml/nj
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To: Daffynition

Ruh Ro.


70 posted on 04/29/2012 11:03:23 AM PDT by grobdriver
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To: oh8eleven
You really think IBM is going to lay off thousands and thousands of employees this way? And, of course, no ex-employee is going to make any of the public aware of this?

Information Week February 28, 2012:

IBM has laid off more than 800 workers at locations across the U.S. in the past 24 hours, according to company sources and documents obtained by InformationWeek.

...

IBM's U.S. headcount fell from about 134,000 employees in 2005 to roughly 105,000 in 2009, the last year it broke out its worldwide employee distribution by country. Since then, its U.S. headcount has fallen to 98,000, according to an estimate by IBM employee advocacy group Alliance@IBM, which is affiliated with Communications Workers of America, Local 1701.

IBM has said it needs to build up its workforce in regions where it's seeing growth. The company's sales in the Asia-Pacific market were up in 9% last year, compared to 7% in the Americas. But critics say that, as IBM increases its presence in countries where wages for programmers can be as much as 75% less than in the U.S., the burden of the redistribution is falling too hard on American workers.


71 posted on 04/29/2012 11:04:27 AM PDT by PapaBear3625 (In a time of universal deceit, telling the truth is a revolutionary act. - George Orwell)
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To: justiceseeker93

“Look at the stock price charts over the past few years and you’ll see how IBM has been greatly outperforming the market in general, based primarily on its bottom line strategy. That’s what a publicly held private corporation is there to do! “

Granted, this style of management does create wealth for stock holders, but America is being reduced to a relatively small “investor class” and a shrinking skilled worker middle class. And where do these displaced American skilled workers go when their jobs are eliminated or “dumbed down” so a non-English speaker can take it over?
Maybe the stock holders will pay our salaries? No?

I am still a few years away from retirement, I hope I can hold out until then.


72 posted on 04/29/2012 11:05:44 AM PDT by vanilla swirl (searching for something meaningfull to say)
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To: justiceseeker93
IBM fell like all the others 4 years ago. The increasing value through 2011 came out of the hides of the taxpayers, or it will.

IBM Is obviously leaving the country, and that knowledge is reflected n its increased market value since then.

You guys aren't fooling anybody.

73 posted on 04/29/2012 11:33:10 AM PDT by muawiyah
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To: vanilla swirl; ml/nj; All
America is being reduced to a relatively small "investor class"...

Obama would like to think so; it makes his class warfare politics more successful, at least in his way of thinking.

During the Bush years, financial commentators were saying that there had never been a higher percentage of Americans with investments - directly or indirectly - in the financial markets. The current recession has lowered that somewhat, but it's still high by historical standards.

I feel for the people being laid off by IBM. That being said, I have my doubts about Cringely's numbers. As a mitigating factor, at least some of these former IBMers are IBM shareholders too, thanks to IBM's stock purchase plan for its employees.

Tellingly, Cringely said nothing in his piece regarding the contribution of the Obama Administration's anti-growth economic policies to the IBM lay-offs.

74 posted on 04/29/2012 11:47:45 AM PDT by justiceseeker93
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To: oh8eleven; PapaBear3625
And, of course, no ex-employee is going to make any of the public aware of this?

IBM has been doing it for years and no one ever finds out on a large scale. There usually are no articles in the paper and the main ones who know are the employee's family/friends.

Those who are cut are paid off to stay silent, and in fact, can lose their severance packages if they make waves.

The remaining employees take on more and more work, in addition to being forced to work with lazy 3rd world workers (such as in Ireland). You get what you pay for, and we are constantly told that they can hire 2-3 in Ireland (or China or almost anywhere else) for one of us. Often, in addition to accent/translation issues, there are quite vast cultural differences, making it difficult to "team."

In addition, the outsourced ones, again, such as in Ireland, have something like unions. Essentially, if they pass their probation, they can never be laid off (I've heard jokes that even if they murder someone). That sure makes them work harder (not).

Meanwhile, too many of the few remaining jobs in the U.S. are filled for quotas only, and not for intelligence/skill.

It's like working on the Titanic at this point.

75 posted on 04/29/2012 11:56:11 AM PDT by Borax Queen
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To: dljordan

As I said, “the inefficient layers of administrative overhead and effective management of offshore delivery are more of issue than their shifting to a higher ratio of offshore labor”.

They’re losing business to companies with higher percentages of offshore workers: IBM’s problem isn’t too much offshoring, it is poor management, including management of their offshoring.


76 posted on 04/29/2012 12:04:28 PM PDT by 9YearLurker
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To: justiceseeker93

I agree that shareholder return is the point of businesses like IBM and this guy is contorting things to make a political point about them.

But the question is whether some of that profit was short-sighted or is unsustainable as more effective providers are now considered by their customers to be viable alternatives.


77 posted on 04/29/2012 12:06:52 PM PDT by 9YearLurker
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To: oh8eleven

Robert X. Cringley had been several guys until one of them decided to quit the gig at the Info Week (?) and take the name with him. There was a lawsuit, who won, I don’t know. Was that Stephens?


78 posted on 04/29/2012 12:07:27 PM PDT by Revolting cat! (Let us prey!)
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To: Daffynition; a fool in paradise

There are so many experts who know what’s wrong with the world and parts of it like IBM, that I wonder why they are driving cabs, cutting hair and tending bars instead fixing the things and places they know so much about.


79 posted on 04/29/2012 12:16:01 PM PDT by Revolting cat! (Let us prey!)
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To: DManA

Your link is to an article from May 5, 2010. Is that evidence that Cringley is wrong April of 2012? BTW, Why did IBM stop breaking out employees by country recently???

From Wikipedia, In 2010, IBM employed 105,000 workers in the U.S., a drop of 30,000 since 2003, and 75,000 people in India, up from 9,000 seven years previous.

IBM India listed 131,000 employees for 2010, not sure why the difference from above.

Here are numbers for U.S. workers as compiled by Alliance at IBM, a union (UGGGHHH) seeking to represent Big Blue employees (2011 and 2010 are estimates by Alliance since IBM no longer reports jobs numbers by country):

2011: *98,000
2010:*101,000
2009: 105,000
2008: 115,000
2007: 121,000
2006: 127,000
2005: 133,789


80 posted on 04/29/2012 12:49:57 PM PDT by King Moonracer (Bad lighting and cheap fabric, that's how you sell clothing.....)
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To: Revolting cat!
There was a lawsuit, who won, I don’t know. Was that Stephens?
It appears to be, but I really don't know.
81 posted on 04/29/2012 1:02:07 PM PDT by oh8eleven (RVN '67-'68)
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To: King Moonracer

I’m sorry, that was sloppy of me. Interesting though that this idea has been kicking around for quite a while.


82 posted on 04/29/2012 1:21:53 PM PDT by DManA
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To: Daffynition

For accuracy, perhaps you should post the “Lenovo” symbol as well.

You know.

The IBM PC company, the original, the IBM subsidiary that is now owned by the People Republic of China?


83 posted on 04/29/2012 1:24:49 PM PDT by Cringing Negativism Network (Obama ate his own dog as a child in Indonesia??)
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To: Gabz
The customers till have the same products, they are just seeking better and less expensive tech support.

Only IBM, or an IBM certified Partner is authorized to provide service on IBM products.

That said, IBM has been actively expanding its business partner base to absorb the technical support because it is too cost intensive to IBM to retain. This has been going on since at least 1990.

It is not the IBM products that have become too expensive, it is their after purchase services.

Thier products are, compared to the market, far more expensive - but they come with guarantees that no other company offers. Example - IBM disks cost several hundred dollars - but if they fail, they are replaced free.

Support contracts ARE expensive - that is true - the competion is too, if they provide the same support.

... but were required to become sales people as well.

Very true. But also true in the market in general ...

A tech with an impeccable customer satisfaction record would be dinged on performance because of a lack of sales.

Also very true, and, unfortunately a fact of life nowadays ....

I hope you husband is doing well with the new employer - tell him a Hardware Tech in Switzerland (ex IBM Business Partner) feels his pain and recomends a bit of sales training - regardless of his present employer - it can only help ...

84 posted on 04/29/2012 1:27:28 PM PDT by An.American.Expatriate (Here's my strategy on the War against Terrorism: We win, they lose. - with apologies to R.R.)
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To: Revolting cat!
There are so many experts who know what’s wrong with the world and parts of it like IBM, that I wonder why they are driving cabs, cutting hair and tending bars instead fixing the things and places they know so much about.

They've gone Galt!

85 posted on 04/29/2012 1:29:34 PM PDT by PuzzledInTX
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To: PuzzledInTX

Their jobs have left America, and are now paying for salaries, food, lodging and the raising of families - of Communist Chinese.


86 posted on 04/29/2012 1:36:45 PM PDT by Cringing Negativism Network (Obama ate his own dog as a child in Indonesia??)
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To: Daffynition
Reducing employees by more than three quarters in three years is a bold and difficult task. What will it leave behind? Who, under this plan, will still be a US IBM employee in 2015? Top management will remain, the sales organization will endure, as will employees working on US government contracts that require workers to be US citizens. Everyone else will be gone. Everyone.

________________

Does this mean uh...the popularity of the company is waning?

Oh, no, no, no, no, no, no...no, no, not at all. I, I, I just think that the.. uh.. their appeal is becoming more selective.

87 posted on 04/29/2012 1:47:28 PM PDT by x
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To: An.American.Expatriate

Appreciate your comments.

My husband didn’t need sales training, had been in it before he went to IBM and in fact looked to go into sales when he was hired on - but they wanted field techs and had no interest in his sales background.

Oh well. It took 3 years, but he is back as a field tech and enjoying it, and enjoying interacting with so many he dealt with while he was with IBM.


88 posted on 04/29/2012 1:55:59 PM PDT by Gabz (Democrats for Voldemort.)
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To: Borax Queen

Having had the misfortune to observe firsthand a company reducing itself to a shell of its former self, I’ll just say that the talented and the good got out on their own as soon as the decline became evident.

The unmotivated, the entrenched, the lifers nearing retirement and the scheming political deadwood will cling to the bitter end. Speaking of scheming political deadwood, I suspect there’s not been a single dismissal in HR despite such a massive reduction in headcount. They always find their way into HR, because that’s where the hiring and firing decisions are ultimately decided and enacted. Nothing quite like being a decider to save one’s own sorry hide in such situations.

I also suspect expensive diversity consultants, training and seminars are going just as strongly as ever, since they’re becoming increasingly more diverse, being averse to letting go anyone with potential standing to sue for racial or gender bias.

They might as well become an arm of the Federal Government, once they get through, because the people and the attitude will be identical.


89 posted on 04/29/2012 2:02:54 PM PDT by RegulatorCountry
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To: RightOnline

“IBM rewarded automotons; clueless bureaucrats who understood process (the author of this piece nailed that part) and could talk the talk. If you stuck your neck out, your head got chopped off.”

Could read:

“Boeing/Lockheed Martin rewarded automotons; clueless bureaucrats who understood process. . .and could talk the talk. If you stuck your neck out, your head got chopped off.”

Boeing has been going through “downsizing” for quite a while now. As has LM.

Automatons and bureaucrats seem to survive.

While LM has the JSF, for now, don’t see much in the future for them.

Boeing military has the air re-fueling tanker, for now.

When the F-18 line finishes and the Saudi F-15 sale is done. . .there are no programs to keep St Louis alive.

Regardless, I expect the president’s and VP’s of Boeing’s military programs to continue to get bonuses for a job well done.


90 posted on 04/29/2012 2:07:37 PM PDT by Hulka
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To: RightOnline

I probably know you.


91 posted on 04/29/2012 2:24:15 PM PDT by TruthFactor (The Death of Nations: Pornography, Homosexuality, Abortion)
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To: Michael Barnes

i turned down a job offer from them in 1998. the had a contract with eckerds. something didnt feel right. a year or so later they lost the contract.


92 posted on 04/29/2012 2:41:26 PM PDT by Donnafrflorida (Thru HIM all things are possible.)
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To: 9YearLurker; All
But the question is whether some of that profit was short-sighted or is unsustainable as more effective providers are now considered by their customers to be viable alternatives.

OK, that's a legitimate question. The folks best equipped to answer it are the Wall Street analysts who study IBM (and other commonly held stocks) very carefully, because that's just what they do in their profession. Turns out, from everything I've seen, that the consensus of these analysts is that IBM will have double digit growth of the bottom line for at least the next three years. Put into Wall Street jargon, they are very bullish on IBM. (Of course, these analyst opinions are always subject to change as events warrant.)

93 posted on 04/29/2012 2:59:01 PM PDT by justiceseeker93
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To: Gabz

Owned a company that provided support to IBM installs during the 80’s and 90’s.

Was a VAR too.

Always amazed me how much Big Blue’s customer’s in all the mid and large shops in the area HATED IBM. Hated their manipulative ways, hated their service contract games, hated their fees, hated the lies and half truths told by their sales people.

We made money by being the access to IBM product with out having to deal with IBM.


94 posted on 04/29/2012 3:07:39 PM PDT by Chickensoup (In the 20th century 200 million people were killed by their own governments.)
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To: oh8eleven
IBM and Kodak are polar opposites in regard to recent corporate history.

IBM successfully reinvented itself in response to the threat of technological change, while Kodak was too slow to adapt and therefore is in Chapter 11.

95 posted on 04/29/2012 3:37:31 PM PDT by justiceseeker93
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To: justiceseeker93

IBM just exceeded forecasts on income, missed on revenue. This is a tough environment and flat market for continued growth, but the company is a market leader for good reason.

We’ll see how they adapt and whether the profits they’ve been generating, in part by not sharing cost efficiencies with customers under long-term contracts, affect their growth in the next couple of years.


96 posted on 04/29/2012 3:37:31 PM PDT by 9YearLurker
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To: 9YearLurker
IBM just exceeded forcasts on income, missed on revenue.

Yes, the revenue miss was by a hair, and some nitwits decided to go into an unwarranted selling frenzy, diminishing the stock price by 5% (about 10 points). Try as I may, I found no other logical reason for it. Now that the dust from that has cleared, the market price has recovered to about 207, which I would consider as a tad shy of appropriate value for the stock.

97 posted on 04/29/2012 3:58:32 PM PDT by justiceseeker93
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To: BigDaddyTX
"Get Warped! Sheees.."

Or "OS/2 obliterates your hard drive!"

98 posted on 04/29/2012 4:22:08 PM PDT by eCSMaster (Conservative patriots, Rise up!)
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To: oh8eleven

Stock price is what you pay, value is what you get. Your argument would have worked just as well for Enron until early 2001.

As someone who has experience both inside and outside IBM, I have to agree with the author that the path IBM management is going down is unsustainable. I saw how poorly structured and problematic many of IBMs outsourcing forays were. IGS charges a lot for their services, but we found that the service was declining in quality as more and more was outsourced and strong, experienced people were layed off. A few years back the company I worked for discontinued the IGS contracts and recruited a bunch of the IBM people who supported and maintained our systems. It was a win-win for us and the support team- we saved a lot of money, started getting better service and they got more secure jobs with less paperwork.


99 posted on 04/29/2012 4:44:45 PM PDT by Flying Circus
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To: Flying Circus

Outsourcing in treason.

Yes, that’s melodramatic, and perhaps a bit over the top.

Yet. What is treason?

Profiting, from harming American interests.

Melodrama? Or not?


100 posted on 04/29/2012 4:48:13 PM PDT by Cringing Negativism Network (Obama ate his own dog as a child in Indonesia??)
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