IBM's 'Stealth' Layoffs Show Need for More Transparency

Ann All

The list of major tech vendors making significant layoff announcements has been growing like crazy since the first of the year. The rolls include Microsoft, Cisco, AT&T, Adobe Systems, Seagate, Sun Microsystems, Motorola and Nokia. Just about the only notable exceptions are Apple and Qualcomm.


Then there's IBM. Big Blue is making cuts, but in an under-the-radar way that some labor experts say demonstrates the need for an overhaul of the federal WARN Act. The act requires companies to give 60 days' advance notice when they lay off large numbers of employees in a single location. But it's easy for companies with widely dispersed, white-collar work forces, to avoid disclosure by spreading their job cuts around. That's exactly what some folks are accusing IBM of doing, reports The New York Times. A scant month-and-a-half after IBM reported a surprising 12 percent gain in net income in 2008's final quarter, the company has quietly sliced some 4,600 North American jobs.


J. Randall MacDonald, IBM's senior vice president for human resources, called the cuts "business as usual for us," telling the Times "this business is in a constant state of transformation." Though it's not uncommon for companies to be in a state of hiring flux, adding workers in some areas even as they cut back in others, critics notes that much of IBM's growth is coming in countries with low-cost labor forces such as India and China. According to the Times, American workers made up just 29 percent of IBM's global work force at the end of 2008. Back in 2007, I wrote about IBM pumping $6 billion into its research and development facilitiies and services centers in India. Last month, Big Blue generated some controversy with a program designed to help some of its laid-off U.S. workers obtain new IBM employment in emerging markets like China, Mexico and Russia.


IBM's strong global presence is a popular strategy with Wall Street, since it helps the company outpace competitorswith more limited overseas operations, but it's less popular with folks on Main Street as the U.S. jobless rate hits levels not seen in years. It is also galling to some that IBM is cutting American jobs even as it lobbies for a chunk of the federal government's stimulus money.


At the very least, says Ross Eisenbrey, a labor researcher at the Economic Policy Institute, multinational companies like IBM should be required to be more forthcoming about where their work forces are located. He says:


All our multinational companies are increasingly less American, except when they are asking for tax breaks and increased government spending in their industries. Knowing where their employment really is would be useful information for policymaking.


I think this is a great idea. As I've found when writing about H-1B visas, there is often a dearth of this kind of data. A flurry of surveys with conflicting data published last spring seemed to indicate that few U.S. companies knew how much work they sent offshore. In a global economy, this seems like the kind of information that investors, consumers and others should be entitled to know.

Add Comment      Leave a comment on this blog post
Mar 6, 2009 6:00 AM annonymous annonymous  says:

This is outrageous.  Congress should not allow one penny of stimulus money to go to companies laying off Americans only to hire in India, China and other countries.  If not, American taxpayers, who are footing the bill with their hard-earned taxes and encumbering our children with borrowed money, are only paying to create jobs in OTHER countries and stimulate their economies - not ours.

Mar 6, 2009 9:30 AM efyin efyin  says: in response to annonymous

I don't think that IBM even requires that money... Read whole article, it says that IBM just reported 12% surprising growth in profits. They are firing employees and telling them that they can work form other locations. If this is happening, there must be some incentive for them to doing so.

Mar 7, 2009 1:41 AM Margaret Margaret  says:

The H-1B Visa guest worker program has 'RESERVED' millions of

high-value jobs for citizens of foreign countries.

"Fake Job Ads' consistently and routinely DENY, DEPRIVE, EXCLUDE and DISCRIMINATE against United States Citizens during the hiring process.

Here is Cohen & Grigsby, a prominent immigration law firm,

displaying their Good Faith Efforts To Recruit American Workers...

Have Immigration Law Firms been Harming American Workers?

Who's To Blame For The Affirmative Action Fiasco?

by Hugh Murray

Has The EEOC done anything to protect

individuals whose National Origin is USA

and whose Age is over 40?

Does EEO data collected from companies track

National Origin ?  Why not?

Over the last 40 years, how many Age Discrimination

cases has the EEOC decided to NOT allocate any

resources and simply dismiss the cases?

Is it a fact that the EEOC has done a disservice to US Citizens

given the EEOC's failure to interpret of Age Discrimination Acts (1967 & 1975)?

Do you think that was an accident?

Why is EEOC routinely and consistently dismissing

Age Discrimination cases?

To redress past wrongs, should Affirmation Action be implemented for

US Citizens over the Age of 40 to ensure Equal Employment Opportunity?

Mar 9, 2009 3:31 AM V V  says:

People, wake up.. IBM has been doing this for many years, at least since 2004.  I was laid off from IBM in 2006 and I worked there for 6 years 1/2.  They even currently charge prospective employers of their ex-employees to pay for previous employment verification with IBM.

Everyone needs to read the IBM Employee Union,  which IBM does not allow their employees to access from within their firewalls.

Mar 10, 2009 9:20 AM Dennis Byron Dennis Byron  says:

IBM is most likely doing the same thing in every geography in which it employs people, something it has been doing for 100 years.  Maybe many of ITBE readers are too young to remember but the "I" in IBM does not stand for Information. For Americans to take up the "Buy American" mantra is just as bad as the EU's constant blather about open source (which is just a charade for the EU to build a nationalistic software choice).

-- Dennis Byron

Mar 27, 2009 4:41 AM Patrick Patrick  says:

US tax payer money should go be used to keep or create new jobs in the US.  Let IBM and the US government know you are against US tax payer money going to create jobs offshore!

Jun 11, 2009 11:36 AM dc dc  says:

Just because IBM has been doing this for years, doesn't make it right.  How can we challenge this practice?  No political entities will listen or do anything about it!  Only certain news outlets will even consider talking about it, but that ends up being just a sneaky way to break the ice on more bad news coming at us, while nobody does ANYTHING!  America is on the brink of serious downfall and it's largely due to this shift of jobs from US to offshore workers or foreign workers in the US.  Hundreds of thousands of Americans are being laid off.  IBM is calling it normal workforce reductions, but those jobs are being immediately re-filled with foreign workers.  There is no reduction in work being performed by IBM.  No... that is ever increasing.  IBM is not laying the people off because the job REQUIRES that it be performed from another offshore location.  The American workers that have been doing the job faithfully and perfectly for years are perfectly capable of continuing to perform their job.  It is just sickening watching our country getting ripped off by the biggest companies.  People are just sitting around saying this sucks, but nobody is doing anything about it.  For this complacency we are paying a very serious price.

Jun 11, 2009 12:42 PM Dennis Byron Dennis Byron  says:

dc's comment above, which came in as I was writing a blog post on the implications of politics and governments on information technology and enterprise software, surprise me.  These issues are much hotter hot buttons than I would have thought. 

But I am afraid it's too late for all the "Buy America," reduce the visas, and stop outsourcing comments that I am seeing here and on a blog post by Bob Evans over at InformationWeek's Global CIO Blog (which is what I was writing my blog post about). Nothing can turn the clock back to the days before 24x7 following the sun for IT development and admin and going where the lowest costs can be found. Instead you have to plan careers and professional goals around the new global reality and be prepared to take advantage of the opportunities it offers 

Believe me, those good old days were really not that good anyways.

-- Dennis Byron


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