Thread: Assemblyman wants probe into IBM's offshore jobs

Assemblyman wants probe into IBM's offshore jobs

http://www.recordonline.com/apps/pbcs.d ... /903270372

By Christine Young
Times Herald-Record
Posted: March 27, 2009 - 2:00 AM
Assemblyman Gregory Ball is demanding a state investigation into IBM's offshoring practices while taking taxpayer dollars.

On Thursday, Ball, R-Patterson, said he was drafting a letter to Chairman Richard Brodsky of the Committee on Corporations, Authorities and Commissions to request bipartisan hearings.

"IBM seems to have a long-term approach to outsourcing," Ball said, "and my fear is they're actually using taxpayer funds to subsidize offshoring good-paying American jobs."

Ball is particularly disturbed by the $45 million Empire State Development Corp. paid IBM Dec. 15 in return for not cutting jobs in East Fishkill in 2008. Only weeks after cashing the check, IBM slashed hundreds of East Fishkill workers.

"If they're taking New York state taxpayer dollars while it was their intent all along to offshore these jobs, then those dollars need to be returned," Ball said. "And we need to find every means possible at our disposal to get that money back."

Ball is also concerned about IBM's treatment of terminated workers over age 65.

V. Gordon Sears, 68, was dismissed from IBM in February after 40 years. His separation package stated he would receive 26 weeks of severance and one year of subsidized medical coverage, paying the same rate as when he was an active employee.

But Sears later learned that fired workers 65 and older would pay a much higher monthly premium and receive less coverage than those under 65. IBM forces the older workers to make Medicare their primary provider while refusing to pay the one-year subsidy.

"I pay $135 a month vs. the $38 I was paying before," Sears said. "That doesn't match up. Not only that, but my coverage is nothing. I have to run up $750 in bills out of pocket before they'll pay a dime."

"They're once again breaking their trust with the community and not providing basic coverage to those 65 or older," Ball said. "The New York attorney general needs to do a thorough investigation of the millions of dollars that have been handed to IBM."

Ball said Big Blue's behavior highlights the need for reform. "This is exactly why we should be focusing our energies on supporting small and medium enterprises, small-business owners," he said, "instead of subsidizing large multinational corporations with global reach, especially those with a proactive offshoring plan, like IBM."

cyoung@th-record.com

Where is Andrew Cuomo as I am sure he would love to slice and dice IBM over this?

IBM was outed for having a long term strategy that involved moving most of its work to foreign workers, mostly overseas. Here is a telling article from 2007.

May 4, 2007
Lean and Mean: 150,000 U.S. layoffs for IBM?

[ big blue | global services | h1b visas | ibm | offshoring ]
Status: [CLOSED] comments (1117)
By Robert X. Cringely
bob@cringely.com
Last year I wrote a series of columns on management problems at IBM Global Services, explaining how the executive ranks from CEO Sam Palmisano on down were 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. Those columns and the reaction they created within the ranks at IBM showed just how bad things had become.

Well they just got worse.

This is according to my many friends at Big Blue, who believe they are about to undergo the biggest restructuring of IBM since the Gerstner days, only this time for all the wrong reasons.

The IBM project I am writing about is called LEAN and the first manifestation of LEAN was this week's 1,300 layoffs at Global Services, which generated almost no press. Thirteen hundred layoffs from a company with more than 350,000 workers is nothing, so the yawning press reaction is not unexpected. But this week's "job action," as they refer to it inside IBM management, was as much as anything a rehearsal for what I understand are another 100,000+ layoffs to follow, each dribbled out until some reporter (that would be me) notices the growing trend, then dumped en masse when the jig is up, but no later than the end of this year.

LEAN began last week with a 10-city planning meeting for Global Services, which wasn't, by the way, to decide who gets the boot: those decisions were apparently made weeks ago, though senior managers have been under orders to keep the news from their affected employees.

If you work at IBM Global Services, ask your boss outright if you are on the list to be fired. It puts the boss in a bind, sure, but might lead to a sort of "Alice's Restaurant" effect in which hypocrisy is confronted and exposed.

LEAN is about offshoring and outsourcing at a rate never seen before at IBM. For two years Big Blue has been ramping up its operations in India and China with what I have been told is the ultimate goal of laying off at least one American worker for every overseas hire. The BIG PLAN is to continue until at least half of Global Services, or about 150,000 workers, have been cut from the U.S. division. Last week's LEAN meetings were quite specifically to find and identify common and repetitive work now being done that could be automated or moved offshore, and to find work Global Services is doing that it should not be doing at all. This latter part is with the idea that once extraneous work is eliminated, it will be easier to move the rest offshore.

All this is supposed to happen by the end of 2007, by the way, at which point IBM will also freeze its U.S. pension plan.

The point of this has nothing to do with the work itself and everything to do with the price of IBM shares. Remove at least 100,000 heads, eliminate the long-term drag of a defined-benefit pension plan, and the price of IBM shares will soar. This is exactly the kind of story Wall Street loves to hear. Palmisano and his lieutenants will retire rich. And not long after that IBM's business will crash for reasons I explain below.

I am told there is a broad expectation at all levels of IBM familiar with the LEAN plan that it will cause huge problems for the company. Even the executives who support this campaign most strongly expect it to go down poorly with employees and customers, alike. But in the end they don't care, which shows that only the reaction of Wall Street matters anymore.

So we can expect round after round of layoffs, muted a bit -- as they were back in the Gerstner days -- by some of those same people being hired back as consultants at 75 percent of their former pay (50 percent of their former cost to the company since they won't be getting benefits). Throw in some overtime and it won't look bad on paper for the people, but it is also very temporary.

Taking a pure business school approach to this news, it probably doesn't look so bad for IBM. What's wrong with a multinational corporation moving work to its own overseas divisions? Squint hard enough and it can even look like good management. Global Services IS overweight and inefficient. Something has to be done and the company has already considered (and apparently rejected) a range of options, right up to putting Global Services on the auction block.

The problem with LEAN is that offshoring on this scale creates huge communications and logistical problems, doesn't generally improve customer relations, and won't save money for years without the parallel gutting of the pension plan.

And it is just plain mean.

This is a policy based on perception. Streamlining and downsizing look good to customers unless it is their project that is being chopped, because implicit in LEAN is that Global Services will be eliminating not just employees but customers, too -- customers whose contracts were underbid and whose projects may never be profitable for IBM. Maybe such axing of customers is necessary, probably it is inevitable, but it hardly has a ring of corporate honesty. Customers to be dropped haven't yet been notified, either.

It is especially disconcerting for an action of this scale to take place at a time when many companies (including IBM) are complaining about a shortage of technical workers to justify a proposed expansion of H1B and other guest worker visa programs. What's wrong with all those U.S. IBM engineers that they can't fill the local technical labor demand? They can't be ALL bad: after all, they were hired by IBM in the first place and retained for years.

What is unstated in this H1B aspect of the story is not that technical workers are unavailable but that CHEAP technical workers are unavailable. Lopping off half the technical staff, as Global Services is apparently about to do, will eliminate much of the company's traditional wisdom and corporate memory in an act that some people might label as age discrimination.

The worst part of all is that nobody at IBM I have talked to thinks this can or will help the business. It will probably just speed up the death spiral.

http://www.pbs.org/cringely/pulpit/2007 ... 02027.html

Taking taxpayer dollars and laying off employees!

I thought the Obama's stimilus package was going to create jobs. Looks like it's working best for HBs and other countries.

Dixie

Unless the government hires you to work for the government, the government can't create jobs.

More early signals IBM gave years ago as to its ill will towards the nation that birthed it:

http://blogs.computerworld.com/the_comi ... _and_wages

[quote]In 2006, IBM produced a chart illustrating the stark differences in wages between India and the U.S. and presented it to analysts in Bangalore.

Ron Hira, an assistant professor of public policy at the Rochester Institute of Technology and author of Outsourcing America, says this chart represents a departure point for IBM.

“I think this moment was so important because it was when Big Blue made the fateful decision to compete by substituting low cost workers in India and elsewhere for high-cost American workers,â€

i called IBM HQ the other day and told them they have some nerve to lay off americans for cheap foreign labor and also taking stimulus money.

There has actually never been a better time to fight on this issue, as in the past it was either not understood by the average citizen or else there were too many ways for them to comfort themselves that the wolf was not at the door for THEM. But now, with "global" companies openly laying off Americans, hiring overseas, and salivating for stimulus and bailout funded projects, there's no way the average American can not feel robbed. Here's another company up to no good with our money:

"We are examining options of setting up more centres in Hyderabad, Coimbatore and Pune apart from ramping up our existing centres like that of Noida. This is to cater to the increasing business opportunities that are coming up, especially in the healthcare segment," Perot Systems President (Applications, Insurance and BPO Solutions) Anurag Jain said."

http://economictimes.indiatimes.com/Inf ... 329813.cms