ibm going the way of the IronHorse...
Posted on 05/31/2007 4:55:11 PM PDT by Salo
BOSTON --
IBM Corp. laid off 1,570 people Wednesday, primarily from an ongoing overhaul of operations in its giant technology services unit.
The Armonk, N.Y.-based company carried out a similar level of job cuts at the beginning of the month, for a total of 3,023 in this quarter and 3,720 for the year, according to IBM spokesman Edward Barbini.
That amounts to roughly 1 percent of the company, which employed 355,000 people at the beginning of the year. But even these small numbers reflect a big project inside IBM to transform its business.
Services is IBM's biggest division by revenue, but the advent of lower-cost competition overseas has forced IBM to work harder to improve the unit's profit margins. In the first quarter, pretax income for IBM's tech services fell 19 percent, even as revenue rose 7 percent.
Wednesday's job cuts were largely part of the company's response. Although IBM did not disclose where the layoffs were being made, the company had blamed the first-quarter profit shortfall on problems in its U.S. outsourcing business.
IBM executives say they expect no more layoffs this quarter. But other shifts like this figure to follow from time to time.
That's because IBM's services overhaul not only involves cheaper labor, but also a quest to use less labor. That means rethinking and sometimes automating the ways that service contracts are carried out.
Tech pings.
I notice IBM services is advertising jobs. Perhaps they are planning on replacing senior higher paid people with lower paid newcomers. Circuit City tried that recently, but it backfired on them.
If they put the money behind the iSeries systems and quit listening to the nay sayers, they would reap huge benefits. I guess all those people over all those years saying the AS/400 (AKA iSeries) would die finally got through to them.
I’m a legacy programmer and I’m damn proud!!
Philips did this a few years ago; they got rid of all the highly-paid veterans and brought in squids off the street. As a result, I am starting all over.
ibm going the way of the IronHorse...
The fact is that almost all computer repair has become part swapping and complete software rebuilds and many kids that grew up with computers can do much of this off the street. Intel or ADM servers are not much harder.
Their plan to switch to services has been slowly failing from the beginning, and is now at a desperate point that requires them to convince customers that support from across the globe is as good as support from right next door. Palmisano has misguided the company by buying Price Waterhouse and selling the PC division, as most of their income has historically been from sales of hardware and software, not service. During this time, HP bought Compaq and is now the largest computer company in the world, based on income, finally dethroning long time champ IBM. Amazing considering HP hardware has never been as good as IBM hardware, but poor management can do that to you.
Amazing... but I actually agree with you on this one. Gerstner started this madness. IBM is just like any other company now, there's nothing special about it anymore. IBM sold and/or closed its manufacturing plants and got rid of its most talented people. All that's left is marketeers, managers and beancounters.... selling hardware made overseas... just like everyone else.
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