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IBM denies report of planned 299,000 job cuts

Posted April 27, 2010

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— IBM (NYSE: IBM) has gone into damage control mode following comments by a Big Blue executive who told a human resources publication that the company could cut 299,000 of its 399,000 jobs over the next seven years in moves to reduce costs.

Tim Ringo was quoted in Personnel Today as saying the company could use “crowdsourcing” to slash headcount and costs. According to IBM's website, Ringo is the global leader of the company's Human Capital Management unit.

A senior IBM media executive called Ringo’s comments “silly” and “ludicrous.”

The company is very sensitive about layoffs and criticism of job cuts, especially in the U.S. However, company annual reports and other data document that the company has cut thousands of jobs in the U.S. over the past four years.

IBM employs some 10,000 people in RTP, its largest campus in the U.S.

The company’s denials did not satisfy Alliance@IBM, the union seeking to represent IBM workers.

“It appears that with IBM's so called ‘crowdsourcing employment,’ job security within IBM continues to be endangered,” said union spokesperson Lee Conrad. “It is clear IBM wants employees that are nothing more than temporary ‘hired hands’ with no benefits and no protection.”

IBM recently laid off more than 2,900 workers in North America, based on IBM internal documents obtained by the union. The company said recently it would no longer say how many people it employed in the U.S., citing competitive reasons.

However, Alliance has document IBM’s U.S. workforce at 105,000 before recent layoffs, down from 133,789 in 2005.

Ringo said using contractors would lower IBM costs substantially.

"There would be no buildings costs, no pensions and no health care costs, making huge savings," Ringo said. Employees would be fired and rehired as contractors for specific projects, working collaboratively as part of a “crowdsourcing” strategy.

Crowdsourcing involves the use of several people working on tasks that would normally be fulfilled by a full-time employee, based on how Personnel Today defined it.

Asked by the publication how many people IBM could employ by 2017, Ringo replied: "100,000 people. I think crowd sourcing is really important, where you would have a core set of employees but the vast majority are sub-contracted out."

Ringo said IBM was considering the move but the company “was not about to cut 299,000 jobs, as staff would be re-hired as contractors,” Personnel Today said.

The story drew specific denials from Doug Shelton, head of corporate media relations for IBM. Asked about the story, Shelton took time out from IBM’s annual shareholders’ meeting in Milwaukee to call Local Tech Wire and WRAL.com.

“You asked if these comments were authorized by IBM, and the answer is no,” Shelton said.

“Frankly, the comments are ludicrous.

“To say that we are even thinking about cutting three quarters of our work force is silly,” Shelton continued. “We need people all around the world to do the work.”

Shelton pointed out that Ringo is not involved with IBM’s human resources group. “He is not part of our HR function,” Shelton said, noting that he is a consultant.

In fact, Shelton said, IBM is continuing to grow its global workforce. “We have added people to our workforce every year since 2002,” he said.

Conrad, a retired IBMer himself, didn’t accept IBM’s denials at face value.

“IBMers have seen this happening already but at a smaller scale: employees terminated only to be offered jobs back inside IBM as contractors at reduced pay,” he told Local Tech Wire and WRAL.com. “IBM workers worldwide need to join together and say to IBM that this is unacceptable.

“Although an IBM spokesperson claims what an executive said is only speculation, just the fact that they are studying it shows what little regard the company has for its employees,” he added.

“One also has to wonder whose comment is right, the IBM spokesperson or the IBM executive. Just who is running the company?”

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  • mapela Apr 30, 2010

    The reason there are 2 people to one office while there are empty offices is because each department is charged "rent" for every office it occupies. The reason the cleaning crew is working 1st shift instead of 3rd shift is to cut back on the amount of equipment and personal items being stolen because nobody is around to stop the thefts. The cleaning crew gets paid the same regardless of what shift they work.

    I was laid off last year right after Big Blue announced great profits. Before I was a regular employee, I was a sub-contractor there. IBM is extremely careful in not treating their sub-contractors as regular employees. They already went through one lawsuit about that.

    IBM is also very good at breaking its own rules. They do what they want when they want if it is in their best interests. I used to have loyalty to this company, but those days are long gone.

    Oh, and don't forget to add Ireland to the list of outsourcing. Afterall, the "I" does stand for International, right?

  • The Contractor Apr 28, 2010

    IBM is constantly laying off US employees and hiring more employees in india/china all the time, this is a never ending cycle. sure they have increased overall employee numbers because for every american laid off they can hire 10 chinese. IBM just likes to keep it's off-shoring out of the public eye..

  • howdiditgettothis Apr 27, 2010

    I have a feeling the CEO is going to lay off a ton of people,
    retire with his multi-million dollar pension, and IBM is going to tank, sending thousands of jobs overseas, and thousands of Americans to the good ole' government for a handout.

    Thanks IBM executives, and all the other execs like you!

    You live the American dream! NOT!

  • jhilfiker2001 Apr 27, 2010

    they are denying 299,000, because they estimate it more like 300,000----a small discrepancy.

  • wildervb Apr 27, 2010

    Joe Messenger, I hope you were being sarcastic.

    The ideal thing that I wish would happen is for all of IBM employees to quit the company and form their own technology company. After all, they could shed a lot of IBM over head, the hold the expertise, why should they need the company.

  • justcommonsense Apr 27, 2010

    I believe that there is a great grain of truth in this. IBM has been laying off folks and outsourcing for over 10 years now. In my job as a corporate travel consultant, our company used to handle the IBM account. We had a staff of 120 here in RTP and about as many out in Phoenix. Then in 2001 the stuff hit the fan, they laid of thousands and cut back travel. We went from holding 40 plus calls all day long to zippidy do dah. In response my company had to cut back...so...they closed the RTP office altogether. I then went to work for IBM in payroll/disbursements as a contractor in the Raleigh office. We were in the same building as Benefits....lots of folks...by August of 2002 IBM outsourced those jobs as well...to Fidelity Investments...let's just say it wasn't pleasant. I then went to the unemployed circle for about 3yrs. I've been back with the original travel company for 5yrs now on another global account but even so the staff is being increased in India the past 2yrs.

  • Joe Messenger Apr 27, 2010

    IBM should have full freedom to fire people without any restrictions, They shouldn't care for the long term employees, Only focus should be profits for shareholders and bigger executive compensation from those extra profits.

    Long-term workers who are not profitable should be replaced by contract worker or off-shore worker as it can increase profits. These long-time workers should get better education and enhance their skills for 21st century instead of their lame technical expertise.

    Obama and his socialist agenda is destroying this great country and tormenting great companies like IBM.

    We should ban Unions as it may give can protect the rights of the workers.

    We are a great Country to have capatilism working it's best.

    I love Wall-Street $$$$$ :)

  • salesman Apr 27, 2010

    Well I gave IBM 5 years of my life and I'm happy to say I was let go last year. It's a quarter by quarter company. Yes they make a profit every quarter and yes they keep letting go US employee's and staffing off shore where ever they can. Sam P.(CEO)job is to keep his share holders happy and he's doing a brilliant job. He will most likely retire next year and get his mega million golden parachute while destroying the lives thousands of American families. But hey...that's why we go to Wall-Mart to buy 50 cent light bulbs, because nobody is going to pay $20 for a light bulb made in the good old USA.

  • 5Rs Apr 27, 2010

    "Social Security will dry up, pensions are gone and union is a bad word." - citizen782

    Accurate statement. Social Security Trust Fund has all been spent by Congress, and the new healthcare bill gives Congress more money to spend to create more unfunded liabilities 5 years down the road.

    Pensions are out. With, for instance, the government taking over GM, committed pension benefits have been severely cut. Since you can't trust the investment strategies of the pension managers, there may be money, there may not be. Some states have lost billions in the last couple of years. And you can bet if this leadership stays in Congress they will find a way to take your 401's.

    Unions have been bad for a long time. GM failed for three reasons: Unions, Unions and Unions. Bad products and excessive government contributed. They will fail again.

  • 5Rs Apr 27, 2010

    "Stop buying those foreign products" - betterplace

    Unfortunately, with today's Federal laws, it is tough to do. Try buying an American TV set. Even tho Corning is at the lead in video technology, their screens are put in mostly Japanese manufactured sets. The insistence by the Government on adding expense (medical is just one of many, most are non-productive expense) and tax laws that increase our costs versus the import-free dollar-a-day labor-produded goods make it prohibitive for most goods to be manufactured here. Companies have moved manufacturing offshore reluctantly, but if they want to stay in business, they have no choice.

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