Last month we blogged about a Robert Cringely column that speculated IBM was about to embark on the biggest round of layoffs in its history with an initiative called LEAN -- which supposedly stood for Lay off Every American Now.
Though a number of observers pooh-poohed the idea, it started to seem a little more plausible following news that IBM would cut some 3,000 jobs, mostly from its U.S. outsourcing services business, by the end of this quarter.
Now there's definitive proof that Cringely got it right -- well, sort of. Instead of LEAN as in Lay offs, IBM is going lean as in, well, Lean -- the business process improvement methodology practiced by Toyota, military contractor Raytheon and many other companies.
IBM's Lean initiative began last fall, and the company recently expanded it from 22 customer accounts to 600, according to an Associated Press article published in CIO Today.
Make no mistake about it, there will be layoffs. As processes become more efficient, it takes fewer folks to perform them. One group featured in the article found that it needed just 40 people rather than 80 to manage 4,000 servers. One-third of the IBM employees whose jobs became superfluous during the first wave of Lean were laid off, while the remaining two-thirds were reassigned to new work, says an IBM VP.
A lot of it has to do with changing customer expectations, says a managing partner at outsourcing advisory firm TPI.
In the huge "lift and shift" efforts that have been IBM's speciality, companies typically expected relatively modest incremental improvements. Now they look to smaller, multiple outsourcing contracts to yield more substantial cost savings. And more of them are comfortable going offshore for at least some of their outsourcing deals.
As too many large companies have learned the hard way, scale is a good thing; bloat is not. If Big Blue doesn't shed some of its excess weight, it will be tough to compete with offshore firms and other services providers.