IBM layoffs strike first in India; workers describe as 'slaughter' and 'massive'
wraltechwire.com
wraltechwire.com
The quote at the beginning of the article describes pretty much every layoff I've ever seen (or been through). The person quoted describes it as inhuman, but HR and managers are told to keep it impersonal (don't induce more crying than there is). You don't get notice (on purpose), you have to turn in company-owned property and they want you out the door (it affects the morale of the remaining employees).
On the other hand, the severance and extended benefits are far more generous than any layoff I've been through here in the states. I'm not sure why employees in struggling business units don't recognize that THEY'RE PART OF A BUSINESS. If no one was laid off, the whole business would close when there was no money left to pay expenses.
That's not bad - probably more than most people would get here in the UK.
It isn't a huge chunk of money in India, just decent enough to get by barely for a month, considering that much of these folks might be having loans/EMIs to pay for.
If the news (that thousands of Indian IBMers from STG losing a job) is for real, they would have a hard time indeed; since there isn't much of IBM-STG kinda stuff happening around (except for shops like redhat/intel/VMWare which might be interested in few folks with sysprog background). People who had entire careers built on and around AIX (not programming, but maintenance/config/admin etc) probably will have a really tough time. Managers, well, guess they just had it coming.
This 'basic pay' will usually be 1/5 or 1/7 of monthly net/gross pay. So, for an average worker (say 3+ yrs) in IBM India, the monthly gross would be around INR60K => severance would be around INR20K, which is really a paltry sum.
Our place has been through a couple of rounds of layoffs (as the result of outsourcing). Both went through lengthy - I'm talking months - periods of "consultation" where the company worked with employee reps to try to make sure the correct people were retained (both in terms of looking for opportunities for voluntary redundancy and seeing whether affected people could be reallocated to other areas), and for those who were going to be let go there was a lot of help in terms of career advice, working with external companies looking for new recruits etc, to try to make the process as pain-free as possible.
Unsurprisingly, the effects of those two approaches are vastly different both for those who are made redundant and for those who stay. I get the impression that many of the smarter companies, at least in the UK, are beginning to recognise this.
Consultation periods are just draining the moral of the unaffected team. Good luck if you have any work to do with the affected team.
While it I have no idea if it would apply elsewhere in the world, I feel like giving people a window (doesn't have to be 6 months) where they truly don't have to worry can have a profound impact on their ability to move along with their career, even under these circumstances.
I even got a job. They were closing my department not down-sizing. My VP told me the firm didn't want to leave "blood on the street" (Wall Street). In other words, rep.
Now in 2008 this changed seriously. Cause banks were dropping over like flies. When Bear (Sterns) and Lehman failed it got worse. But I hear now it's back to worrying about "blood on the street".
None of this applied to the back-office staff. You got fired there, you got a few weeks and that was that.
You do seem full of hatred. If the employees had started IBM, bought out their division or otherwise owned the business, I'd agree with everything you say. In this case, management should also be sacked - On the other hand, maybe part of management's failure was hiring too many employees?
> "Announced today including managers"
This is the failing X86 based server business (STG) which IBM has sold off to Lenovo, most likely duplicate test/support staff which Lenovo already have. They aren't just trimming - the departments are closing down.
I work in contract electronics manufacturing, for Sanmina, and in Oct-Nov 2007 we laid of 16% of our global workforce of ~50,000. Compared to our competitors who waited until 2008 (Jabil, Celestica, Flextronics, Plexus, Benchmark, etc), this ended up being a very smart decision. Just compare the stock prices of each company over the past five years. In 2003 we won the PC & Thinkpad manufacturing business from IBM, which accounted for about $3b/yr in revenues over each of the subsequent five years. Revenue, not profit. We only made about 1-1.5% profit on that ridiculously tight margin commodity hardware business. In 2008 we sold it to Foxconn & Lenovo, much like IBM just sold their x86 server division to Lenovo. It is a smart purchase for Lenovo because they have ready access to cheap manufacturing capacity and they operate at a scale that allows them to negotiate much better deals throughout their supply chain than IBM could. This is the same reason Foxconn, Pegatron, Compal, & Quanta are [roughly] the only ones making money hand over fist building consumer products: either they negotiate exclusive deals on high-demand, high-margin products (e.g. Apple) or they just operate on such a huge scale that they get optimal prices on direct material and freight. It's impossible to compete, which is why the smaller (say, $3-10b/yr revenue) EMS companies have intentionally focused on low vol / high mix / high margin areas over the past 5-7 years. This includes things like defense goods, medical products, network infrastructure (especially microwave & optical/fiber), robotics, and similar complex or highly regulated products.
In our deal, we had to layoff a few people, but not too many and mostly direct labor (factory workers) and lower level business management. We "sold" a full 10% of our global IT staff to Foxconn in the deal, and they took over a high percentage of the business folks responsible for the business, too. Why? Because they wanted to ensure continuity in the marketplace.
This just isn't something Lenovo needs very much of from IBM for server support. They're already a hardware company and already have the same or similar functions in their existing org. If these people being laid off are good, they'll be in demand and easily hired elsewhere. It's not like the Indian domestic market is suffering lack of demand, and it isn't like US companies aren't still clamoring for an increase in the H-1b limit (not to mention all the L-1/L-2 visas out there).
For a variety of other layoffs, adding management punishment would make some sense. This one, not so much.
Oh, I see. You're a Communist and think IBM exists to provide jobs, not to provide shareholder profits. That'll necessarily lead you to a different conclusion than it led me.
Just an interpretation to what's going on there.
So I'd never tell an employee who's part of a RIF that they're fired. The rest of what you describe is exactly how HR trained us to handle the matter.
Interesting. Are big tech companies less generous than big engineering firms in other fields? When companies like BP, Boeing, etc. have had layoff rounds, 3 months is just about the minimum package for an involuntary termination, and it's common to first offer much higher voluntary packages to reduce headcount without having to actually fire (sorry, "terminate") people, especially longtime employees. My dad accepted a voluntary severance package equal to 18 months' salary some years ago (something like "1 month per year of service up to a cap" is a common formula for voluntary offers).
I think this is in part due to what you mention: the morale of the existing employees can be significantly impacted by how their former colleagues were treated. Many people know each other out of work, so escorting the employees out of the building by security with no warning is not going to successfully keep them from talking, and if anything will probably just make them more resentful when they meet up for a beer after work to discuss how the layoff was handled. The former employees may also turn up in other situations (college recruiting, industry organizations, consulting/sales, etc.) where it's not to your company's advantage for there to be a lot of people floating around who hold a grudge about the manner in which they were abruptly laid off.
And thus was the lesson learned by one more person. We are all, each and every one of us, hardware to be virtualized and eliminated as soon as possible.
We are all, each and every one of us, an expense to be minimized. You may get along great with your boss and co-workers, mutual admiration all around, and the people may be loyal to each other, and really mean it.
But when the animal that is the corporation decides it needs to eject you, you're ejected. It may even fall to those mutually loyal people that you worked with to eject you. And they'll feel bad. But it's not them making the decision, it's the corporate animal.
So do a good job, but go home at night and play with your kids, or dog, or S.O. Don't waste your life at work, because work doesn't care about you.
... because the person who was let go and who worked very hard didn't learn anything, didn't improve his ability, couldn't take the tremendous experience he had gained and apply it in a new job or gasp start his own enterprise.
No, this isn't an anecdote that should serve as a red flag signalling IBM's continued move downward.
Far from it. This is an object lesson on why we shouldn't even try.
Are you plainly asserting that "this isn't an anecdote," and pairing that with a sarcastic statement that "this is an object lesson", meaning that it's not an object lesson, to reinforce your assertion that it isn't an anecdote?
Or are you plainly asserting that "this is an object lesson," and pairing that with a sarcastic statement that "this isn't an anecdote," meaning that is is an anecdote, to reinforce your assertion that this is an object lesson?
Or something else?
Its fracking karma whoring civilians chiming in with anecdotes they heard from their mate down the golf club about labour law in a different country entirely that piss me off
This makes me wonder, is this the first significant downsizing they experience in Bangalore? Did they think they were invulnerable to these kind of things?
IBM is pretty generous with the severance in the US too. Something like a week's pay per 6 months worked, capped at 26 weeks. If you've been working there a while, that's a half year of salary. Plus there is generally a month notice, in theory so you can find another job internally.
This is not really the case, it seems there is usually a hiring freeze for the month between when people were notified and when people are let go.
Second, there is a rumor in IBM that once an employee is marked as an RA (layoff), they are placed on an HR blacklist preventing them from finding another job internally. Departments that hire an employee placed on the RA blacklist are believed to have to layoff another employee to take their place.
I don't understand. Why is it so important to prevent laid off workers from being rehired/transferred? What's the rationale?
A couple things jump out on this article:
1 - One analyst has estimated that IBM will cut 13,000 of its more than 434,000 workers, based on the amount of money set aside for the rebalancing This is actually very few. Cutting 3% is hardly a rebalancing. Many companies cut double that every year as part of annual performance management.
2 - "Just heard from a colleague in Bangalore that job cuts there have begun. Workers asked to leave on the spot. He claims 6 out of 23 people in his department." If that's the biggest you can find, again it's hardly notable. If you're in a division that's being sold off because it's low margin, expect a lot more.
3 - The one thing that did surprise me is that they're cutting first in India. Is that because of political pressure? Cutting 3% of your headcount in India won't cut 3% of your payroll costs, because the resources are so much cheaper there.
My heart is out to anyone who gets surprised with a cut. It's painful, especially if you are early in your career and don't have a lot of money tucked away. In the medium term it can be very empowering. In the long term, I don't know of anyone who was laid off who didn't say, "Good riddance!"
Depends on whether there is a hiring freeze or not.
A firm I used to work for did a hiring freeze. The well run parts (in a part of the world that is easy to fire people) of the organization obliged. The poorly run parts (in a place that's hard to fire people) didn't. So the bloated core got fatter, and the money generators got starved for growth.
So, 20% of R&D yielded > 40% of revenue (more than one product came from our site). How is that a problem? I was flabbergasted. As a contractor I said nothing, but was astonished no one else spoke up either.
At yet another employer they did a very well thought out layoff of approx 15% of the workforce. It was very well thought out and preceded by 6 months of heavy analysis on new ways to work. The culture was hurt but the firm saw process improvements too. Perhaps it was too easy as every time management needed to cut after that, they skipped the process improvement step.
And our site had the highest return on investment in the company. Cutting back was suicide. In fact, that's how it played out - declining revenues due to a stagnant product line, for years.
I work at a startup now.
If a company blindly cuts every division the same amount, it's dumb. 20% across the board cuts penalize the productive too much, and don't cut the unproductive enough. It's better to get the same cost savings by shutting down or stopping unproductive activities, letting go or selling the least productive activities, and investing in the future. You can still get the 20% personnel cut, but some places lose 50% of their staff, and others gain staff.
And here is your "thank you": > You don't get notice (on purpose), you have to turn in company-owned property and they want you out the door
Why you IBM would or any other big-corpo follows this scheme of laying people off is beyond me.
May be true in the US. In India its peanuts. In fact its more like alms.
>> I'm not sure why employees in struggling business units don't recognize that THEY'RE PART OF A BUSINESS.
If that was true, lay off's would be top bottom hitting the leadership positions first.
That rarely happens. Layoffs are just a way to immediately turn the revenue equation in the positive trend buy cutting costs. That works for the next 2 months or so. By the third month every one knows cheap tricks like that create no difference at all.
Six weeks full salary is generous? You have worked for some very small or very cheap companies.
What is happening in India is mass layoffs, sad and unfortunate but "slaughter" ?
When AOL and other US corporations outsourced all the call centers to India in 2000-2010 , there were mass layoffs here too.
Firstly, it is not surprising that this is happening. The technology in the IT industry has changed, and IBM was late to the cloud party. We were still manually building servers for projects as of the end of 2013. I myself was put in charge of a large project to virtualize hundreds of internal IBM application servers. Let's say that again: as of 2013, there were still hundreds of mission-critical IBM internal applications running on physical hardware until I was given the project to transition them to virtual servers. They now have the ability to run stuff virtually thanks to some new hardware they've installed, but processes are still very manual. As I was leaving, I told all of my teammates to be careful and get out while they could, because as soon as IBM went full-steam into cloud, all of their jobs would get automated. It takes anyone a few minutes to get a server with applications running on a cloud service. At IBM, it took me a month because everything had to be installed and configured manually, and the teams were always so busy that you had to wait until someone was available to do their part, whether it was installing AIX, installing DB2, configuring monitoring agents, configuring backup agents, doing BAU handover checks, whatever. If you were IBM's execs, which would you choose? The writing was on the wall for a long time. And while elephants can take a while to get moving, it is true that they can eventually dance, though they can cause a lot of damage when they finally do get going (and need to dance more frenetically to make up for lost time).
Secondly and more importantly, it's sad that India was hit first in such a massive way, but it's not unexpected. I have nothing against Indian people and I think the situation is unfortunately more to do with IBM than it does with India. IBM was truly scraping the bottom of the barrel for their hiring, and in India, they went below the barrel in order to cut costs. It wasn't enough, as they went too far and hired too many people who were not capable of actually doing their jobs. I have plenty of examples, but we had sysadmins with senior in their titles that rather deserved to be labeled junior. My colleague beside me, a program manager of another program, turned to me exasperated when one of the Indian project managers in her program couldn't figure out how to fill out a project change request template. So the project manager wanted my colleague the program manager to fill out the form instead. Templates are there to make it clear what you're supposed to write. This level of incompetence was a trend, but I want to make it clear again, this is not the fault of the Indian people. This is the fault of IBM deciding to not have high standards. When the entire Domino team in Australia was let go (Domino is IBM's mail server) and replaced with a new, inexperienced, and untrained team in China, yet another colleague was again exasperated. Maintenance work that required only 6-hour change windows in her project became such that they needed 2 entire days because the new Domino team didn't know what they were doing. Again, it's not that the Chinese people were the problem. It's that IBM wasn't willing to pay to hire high-quality people, nor invest into training the people they did hire. As for why I think the issue of high/low standards is a bigger issue than technological change, I point you to an anonymous posting I made on Quora once. Being anonymous doesn't seem so important now. http://www.quora.com/IBM/What-are-the-weaknesses-of-IBM
I tried copy-pasting the Quora post here, but then HN told me that my comment was too long. :D
edit: clarification
> their level of english is terrible
Indians'/Chinese'
I've encountered this in dealings with companies, as well as within companies (one, otherwise brilliant, co-worker had the specifically annoying verbal tic of pronouncing the letter 'R' as 'A', which given local acronym naming schemes was very frequently encountered.
I've also, of course, met (and worked with) foreigners of all stripes with flawless (and often charmingly accented) English.
And Sametime is not lagging too much behind.
Is this so shocking or even wrong? I would expect a company with the history and size of IBM to have tons of "old" hardware/processes. In fact it's that history, perceived wisdom and entrenchment that I would assume many in the enterprise world would would see as an asset for IBM. Am I the only one who doesn't think a business should jump on a new tech bandwagon at the expense of a solid and working business model? I'm not saying virtualization or cloud computing is a fad by any measure, but how does a company rationalize rebuilding old tech with the risk that it may be the wrong path/choice or jeopardize a working model?
I know little of IBM and cant say I'm part of the corporate/enterprise market but that fact that IBM has "old iron" in their portfolio seems to be less concerning for their customers and more of a perception issue among the media.
Cloud is not the silver bullet. But at the same time, there is not much merit in choosing to be a luddite and not use the capabilities of cloud where there's a genuine need. I feel IBM, to an extent is guilty of not pursuing things on the cloud front and is now paying for it.
You can say that again. And it depends on where you are. In South Florida the cloud - well - sucks. Due to the carriers not being able to keep their networks up. I know companies who moved their PBX into the cloud (I'm going to name carriers) with Earthlink, Windstream, Comcast and ATT - misdirected, noisy (like talking in a wind tunnel), dropped calls; all classic signs of over extended networks. Latency. And you feel helpless cause all you can do is call your carrier and wait on hold for 45 mins.
I know another company, a local gym, which (the owner is a SOB so he deserved everything he got) got talked into moving his cash register into the cloud. I warned him against it. But he accused be of not being "up-scale". His way of telling me I didn't know what I was talking about. Of course, a couple of weeks later his Comcast goes down. He calls me, begging for help. I was like, "Nothing I can do. You have to call Comcast".
In South Florida, the only reliable service is fiber. Even T1's are fragile. And fiber isn't cheap.
You're talking about moving a physical service into a hosted service; IAAS/SAAS. We're talking about actually developing and coding the IAAS/SAAS solutions to be cloud ready and performant. This infers automation, utilizing version control systems, scaling, stateless servers etc.
What those companies did was move their servers onto the web. It's like me telling you that I'm moving my wordpress blog from my desktop to linode. Just because I'm using linode does not mean I'm utilizing the infrastructure in any sort of "cloud" manner. If the server goes down and I've not designed my stack to be resilient I'm not "cloud." We expected IBM to be designing underlying cloud infrastructure years ago. Instead they bought Softlayer. I'm not sure if they've even done anything remotely interesting since that.
Next year they'll probably start trying to massively hire Openstack developers just like Cisco/etc are doing now (also late to the party).
Semantics, but vastly different.
Really? This is exactly what the "cloud" service are selling. Ok there's a middle-guy in there. The actual service provider. But from a customer point of view - this is the cloud.
IBM, Microsoft, Google sales guys are all over the place "selling" the cloud. "Move your infrastructure to our cloud - cheaper and access everywhere on everything. No need to maintain a server, or even a PC. Run your business from your iPad".
Sounds great. And would be great, if we had the communication infrastructure in place to support it. Look, it doesn't matter what's running the cloud if no one buys the "cloud".
Back to your topic.. I agree. But we've seen this story before from IBM (and Cisco and MS). They are late to every party these days.
So, I think it's wrong to say that IBM didn't pursue things on the cloud front. There was some work on it. But the execs - not the worker bees - certainly screwed that pooch. And it'll be the execs getting the bonuses for courageously reorganizing their departments too.
It's not a bad thing if IBM wanted to stay on pure hardware for technical reasons (hey, virtualization can have performance hits, depending on the application). But even IBM didn't want to stay on pure hardware, and that's why it can be considered a sad thing that it took so long.
edit: clarification
And that IBM decided to fire the people they had trained and knew what they were doing.
If by "onshore" you mean China, then you'll probably get your wish. Otherwise, probably not.
I suspect I'm not alone.
> are you saying they were incompetent because they were Indians?
Quite obviously not.
Just because you might have had exposure to some idiots does not mean you label the whole bunch as incompetent.
It's a cultural difference: in India, people become engineers because it carries prestige. They don't code because they love computing (this is measurable: ask how many outsourced engineers have GitHub accounts). The lack of actual interest in their profession demonstrates itself in their work.
The best Indian programmers I've met have either left India or weren't born there in the first place, in either case I'd consider them westerners.
Funny. IIRC, in One Night @ The Call Center, Indian call center employees are told that a 35-year-old American has the intelligence of a 10-year-old Indian. Ouch.
obligatory: http://xkcd.com/725
I'm sure their employment contracts mention 1-2 months of salary in event of termination (or a similar notice period in case the employee wants to leave) - so this is not more than committed.
(In India the "Base Salary" component is often 50% of FIXED compensation, not including bonuses. This is done to reduce the statutory requirements on the company, especially in times like this.)
Why?
3 months of salary, to spend in India where things are relatively cheaper, seems like 3 months of Salary to me.
There are regular cuts across the board, and there is actually very little attention paid to the internal ratings of the employees or keeping well-functioning groups together. Everyone left behind is expected to take up the slack, and additional hires are only made when things break badly enough for upper level management to be aware of it.
And I suspect that getting a job in a MNC is seen a bit like the civil service is ie a job for life.
Not sure how many (what percentage) is in India and how many are affected.
GE is the same way, as are some other former USA companies, when all the Americans are fired you have to begin firing in India and China, which is new to those areas.
Now if they really wanted inhumane, they'd make the Indian workers train their replacements, then fire them.
I suspect that is how they've been able to impress financially given all the multimillion dollar troubled projects they've overseen. Should be interesting times to come. Apparently Watson is now the great software hope, we'll see.
There are hardware and software engineers throughout the USA. I also wouldn't call 66,000 people relatively small.
Do you know what percentage of these HW/SW engineers are in research? (i have no idea)
What you could you possibly do with so many people!