Tuesday, May 08, 2007


Big Bad Blue

Here is a brief but scathingly comprehensive article criticizing IBM's latest downsizing push - dubbed "Project Lean". The article came from a website run by American residents and citizens of Indian descent whom you might hastily imagine are sympathetic to outsourcing. But think again. Indians, whether they work in America or in India, are workers too - and as such are as vulnerable to layoffs and downsizing as the rest of us.

IBM has laid off 13,000 workers so far this month, and may soon be laying off at the very least another 100,000 - including around half of its U.S.-based Global Services division, or about 150,000 employees. Many of those earmarked to become "dumpies" - the latest argot for "downwardly mobile professionals" - are experienced middle managers and technical professionals, the sort who do a lot of the actual work at places like IBM. IBM also intends to shoot itself in the other foot by cutting off customers who are not sufficiently profitable, eschewing long contracts for short ones with quick payoffs. In other words, IBM will apparently be downsizing customers as well as employees. Moreover, in their impatience to make a profit, IBM executives are "losing touch with reality, bidding contracts too low to make a profit then mismanaging them in an attempt to make a profit anyway, often to the detriment of IBM customers."

It is not that IBM is suffering. Not yet at least. It is financially healthy, with revenue exceeding $91 billion in 2006. It wants only to be more so, at the expense of almost everything else. The author of the article reminds us of a study showing that executive compensation at corporations that had engaged in layoffs within the previous year was 22.8 percent higher than that at corporations of comparable size that had not. That says volumes about where the money saved from downsizing is actually going.

In the meantime, IBM may "eliminate much of [its] traditional wisdom and corporate memory" and expose itself to logistical malfunction due to the loss of skilled personnel. That, predicts the article, could even further alienate its customer base and send this "fat and mean" corporation into a death spiral.

"Fat And Mean - IBM's Layoff Plans and the New Downsizing" from Desicritics.org

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