Business

IBM denies report of planned 299,000 job cuts

Posted April 27, 2010 2:17 p.m. EDT
Updated April 27, 2010 2:48 p.m. EDT

— 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?”