Big Blue and pink slips – lay off rumours spark worker protests

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Workers at IBM Corp. are preparing to picket one of the company’s plants in New York today following reports that Big Blue is poised to pink slip thousands of employees. IBM has refused to officially comment on the reports.

A representative from IBM Canada’s PR agency told IT World Canada that IBM does not respond to rumours.

Reports on the extent of the alleged layoffs have varied significantly – leading analysts and other industry observers to caution against drastic and “unsubstantiated” claims.

“What’s being talked about conservatively is between 8,000 and 12,000 workers being laid of this year [in North America],” said Lee Conrad national coordinator, Alliance@IBM told IT World Canada.

Alliance@IBM is a union representing more than 6,000 IBM employees in the U.S.

Conrad said workers were “angry and disappointed” over the company’s offshoring strategy that has depleted its North American workforce.

“Employees have been working long hours, and instead of being viewed as assets [are] treated as liabilities,” he claimed.

He said, to call attention to the job cuts and off-shoring, the union would hold an “informational picket” on Thursday afternoon at the IBM facility in Poughkeepsie, in the Mid Hudson Valley, New York. The site is manned by some 4,000 employees, according to Conrad.

Alliance@IBM is affiliated with the Communication Workers of America, but is not recognized as a negotiating body by IBM because the group still has to hold a union vote.

The union’s announcement yesterday followed reports that IBM intended to lay off 150,000 employees as part of its so-called Lean program, a method of streamlining manufacturing that emphasizes efficiency and productivity.

The program’s critics say the term LEAN should stand for Layoff Every American Now.

Reports of the layoffs also coincided with the meeting yesterday of Samuel Palmisano, IBM chief executive, and business leaders in India, where the company has invested US$6 billion (CAN$ 6.62 billion) to set up new research facilities and expand its outsourcing centres.

A controversial report by Robert Cringley on the PBS site claimed Big Blue was set to lay off 150,000 employees.

“The Big Plan is to continue [the job cuts] until at least half of Global Services, or about 150,000 workers, have been cut from the U.S. division,” Cringley claimed in his column.

Cringley’s report has been sharply criticized by some observers as being highly exaggerated.

It’s “too drastic to be true,” said George Goodall, research analyst, Info-Tech Research Group Inc, London, Ont.

He noted that 150,000 is nearly one-third of IBM’s estimated 385,000 worldwide workforce.

Slashing so many positions in such a short time frame would have disastrous effects, he said. “It would be very difficult to outsource all those jobs in such as brief period without IBM bleeding to death.”

Another analyst echoed these views.

Bob Djurdjevic president of Annex Research Inc, a market research and consultancy firm based in Scottsdale, Ariz, noted that “there’s no business reason” for IBM to lay off so many people.

He said while Big Blue might be trimming here and there the figure of 150,000 is “hog wash.”

Even Conrad expressed the view that “150,000 is a bit over the top.”

“We don’t even have that many workers in the U.S.,” said the Alliance@IBM official.

However, Conrad also criticized what he sees as a growing trend within IBM “to get as much work done with as [few] workers as possible.”

He said just last week, IBM dismissed 1,315 employees, and an unknown number of contractors from its Global Services division.

The business unit has a workforce of 190,000 people in 160 countries and it accounted for US$48.25 billion (Can$53.2 billion) of the US$91.4 billion (Can$100.9 billion) in revenues earned by IBM last year.

Conrad said workers received an information package from IBM explaining that the layoff was part of a “skills re-balancing” initiative.

He said the term simply meant that “management is playing musical chairs with IBM employees.”

He said IBM continues to trim its Canadian and U.S. workforce by reducing staff inline with its Lean program and transferring operations abroad.

Transferring expensive North American operations to cheaper off shore locations is a practice that is growing in popularity in the IT industry, according to consultancy firm IDC Ltd.

The Framingham, Mass-based consultancy firm estimates that off shore IT services vendors will capture US$29.4 billion (CAN$32.4 billion) in worldwide customer spending by 2010.

IBM has an estimated 54,000 workers in various facilities in India and an additional 100,000 workers in other offices outside North America, said a Canadian analyst.

“It is very common in the industry for firms to ramp up operations in inexpensive overseas locations, while winding down in the more expensive areas,” Sebastien Ruest, vice president, services research, IDC Canada.

Other IT industry observers have remarked that layoffs are a certainty with the advent of offshoring.

However, Ruest said, “unsubstantiated” reports of layoffs do not benefit either management or union organizers.

“These rumours will only create uncertainty and the perception of instability among customers. It might boost union recruitment in the short term, but what hurts the company also hurts the workers.”

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