IBM to cut thousands of jobs as coronavirus plays out

As an IBM executive, you don't want some PE firm becoming majority owner and replacing you with someone else.

When the stock price drops precipitously, they lose money instead. When the stock price falls so low that they fall out of indexes, it will then go even lower, as the companies which hold the stock in an attempt to mimic an index (index funds, etc) switch to getting rid of it instead, which means selling more of it to an already-skeptical public.

Having a lower stock price means it has a smaller leverage on those things.

Case in point I was on a call where an executive stated: "We're moving to a subscription model in our product because, to go public, that's what Wall Street is going to want to see". Not because that's where customer demand is, or because it makes sense for the business. But this short sighted rationale to meet a short term goal inorganically. Wall Street and VCs are very much no different than the influencer marketing crowd. They just happen to pretend and purport they're good at growing business, when the real MO is lining pockets.

[0] https://www.goodreads.com/book/show/38390751-the-infinite-ga...

If you look at their annual report, they are defining free cash as the cash flow from operations minus capital expenditures. This is better than "invest nothing and send it all back". In 2019, their capex / cash flow was about 12%. They certainly don't invest nearly the amount that an Intel or TSMC would invest in their lines - but the products they produce don't really require that.

I'm totally with you on stock buybacks being a big problem.

What you are suggesting is that every company should prioritize growth by reinvesting in itself. It doesn't always make sense to do so though.

That being said, it will never happen.

I think there are real problems with the combination of stock buybacks and how executives are incentivized, but the currently popular idea that companies shouldn’t return profits to investors, or that this is somehow nefarious, is misguided. This is the entire point of for-profit corporations.

https://www.vanityfair.com/news/2016/06/the-valeant-meltdown...

again... your comment is the pure demostration of how sick the self righteousness of this site is.

There is one way to make it scale, sort of. Find a consultancy solution that is applicable across multiple customers. E.g where multiple customer teams have essentially the same problem. Once you have ironed the bugs out of your consultancy solution, you can template it and reuse in new situations with fewer surprises. You can still include a risk bucket in your charge-out rates, but this is more likely not to be used and thus taken as profit. In the case with which I'm familiar, a very large organisation had multiple teams writing business requirements that would be put out to tender. The central organisation had never tried to standardise this process, and multiple similar mistakes were made by multiple customer teams. Hence a good business opportunity for a small external consultancy who could spot the mistake patterns and solve them multiple times.

Whether the template approach is good for all customers is a wholly different question. You can also get badly burned (in cost and / or reputation) if you find after starting with a new customer that the template isn't applicable after all. Hence the common situation where a consultancy organisation deploys its 'A-team' to win and start the work, and then swaps them out for cheaper and less skilled staff to complete the deliverables.

[Edit - added example]

IBM/TCS/Infosys/Wipro/Cognizant are consultancy shops which are some examples of MRCs. They generally hire at scale - like 10,000 people in one go or scooping up a whole college’s batch. Thats how they have also been able to keep a freshers salary static at 3-5 LPA (~4k-6.5k USD) for 13 years now.

What about EPAM Systems btw?

My experience is the Tier 2 vendors you've listed are more tactical, and typically handle execution (outsourcing etc.).

Whereas MBB are more strategic, C-Suite, but the value-add may or may not be significantly different from the former.

Edit: I was confused by this:

https://www.ibm.com/cloud/architecture/architectures/ibm-clo...

The amount of misconceptions that are passing in a lot of these comments for facts is astounding. Many pretend that they don't know that IBM is one of the major PaaS and IaaS cloud providers. Others pretend that they ignore all the R&D done in IBM. Others still ignore the fact that IBM is one of the most open source friendly companies out there. And others still forget that it is probably the oldest IT company around that has reinvented itself more times than Elon has begged for public attention.

Anyway. Each with his own opinion. Luckily business out there has it's own as well and places its money on it.

With that I'm not trying to absolve C-suite from their responsibilities or their shitty management that will leave thousands of good workers high and dry. This is a different issue altogether but like I said the hate in these comments have nothing to do with it.