Desicritics Comments on Fat And Mean - IBM's Layoff Plans and the New Downsizing

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Wed, 10 Feb 2010 21:52:16 EST

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Comment by Soros.

Mon, 21 May 2007 07:29:45 EDT

Naiks analysis is interesting and so is Sridhars "Fundamentals Of Economics" . The path shown by Jack Welch is being taken by all the corporates in the U.S.The best of the companies as we know are looking at 'Funds Management' than to sweat it out in the Sun. The urge to hike the stock value of the scrip is certainly not in the Share Holders Intrest but to ensure that it is the 'MOST Sought After Shares" as the promoters within the organisation speculate on the shares and make a huge Ransom.The idea is to make more and more money. It is not only on Out Sourcing but every single cost angle is worked out to ensure that the CEOs and interested promoters keep reaping the profits. No wonder why companies like Enron, Arthur Anderson,Morgan Stanley have all had thier roles in unscroupless ways of looting the Investors savings and making the CEO's rich over night.Mind you, every corporate fraud is not done by a person or two but key officials in every aspect of the organization are involved.If one needs to know about Corporate manipulation one has to recall Bush's systamatic lies to the world about W.M.D.in Iraq and the American Corporate controlled Media played to Bush's gallery. Life long i have been working for corporates and i know the language of money and what it can do. Sanjay's para 2 is the typical Management Student approach. They are all hammered into the belief that additional profits generated gets back into the economy by way of additional investment or jobs.To this Mr.C.R.Sridhar's "Fundamentals Of Economics "is an apt reply. The additional profits does not go via the mainstream Economic Activity but gets into countries that are Called "Tax Heavens" and thereafter it gets into global speculative trade such as stock markets and real estate.If one checks the records of all the CEO's who busted up their companies for insatiable appetite for wealth, they have always got gentle punisments. No sooner they end their prison terms they enjoy the same lifestyle as before. Resorting to the old life syle comes through the assets made in ficticious names.Capitalism does not work on the principles on ethics but it thrives only when there is access to manipulation,fraud,cheating,no accountability and a host of acts of debauchery that management Guru's call it "IN SEARCH OF EXCELLENCE" I have personally asked many Corporate honchos as to why underdeveloped countries are not willing to go beyond as Naik puts it "Generation Of thought" and their replies are standard.When easy money comes why go elsewhere. For a lenght of time i have been observing the shift in the patterns of business conducted by underdeveloped countries and it is alarming to note their dependency on advanced capitalist countries for markets.Once a shift takes place or even a global slow down occurs underdeveloped countries will be hard hit. All said and done which segment of the population in underdeveloped economy gets hit by the cascading affect? Again it is the poor as subsidies are ruthlessly chopped to ensure the so called "ECONOMIC GROWTH" is maintained at any cost.A dip in the saving is never thought off but business has to be usual. The story of IBM is just the beginning and we are yet to see the worst practices to follow.It is sad to observe how many fly by night authors glorify the practices of the most ruthless CEO's in the U. S.(who have gone to the exdtent of canibalising the middle order executives) and their so called success stories titled "Motivational Theories" of business management or 7 ugly habbits of the most highly notorious people --- Title coutesy. Steven Covey.

Comment by sridhar

Mon, 14 May 2007 05:39:03 EDT

Sanjay, 1.Job losses in rich countries would mean decline of purchasing power in that country.eg If a computer programmer earning $6000 per month in US loses his job to his counterpart in Bangalore for say $1000 per month there is loss of $5000 per month of purchasing power in US. If these examples are multiplied then the loss of purchasing becomes significant in US.Consequently,on account of low sales/spending in US there is cost cutting of payroll leading to downward spiral of purchasing power in the rich economy.If this happens in US(worrying signs that they are)then the consumer of last resort(US) with diminishing purchasing power would also slow down outsourcing to low wage economies.If stability has to be maintained then the $6000 per month job has to be relocated in India which would be plain silly as low wage advantage would be lost for US corporations.(refer-William Greider,One world ready or not) 2.All the available evidence suggests that the money saved does not go towards job creation but goes to the top Management honchos and to the shareholders.Economists have noted that out of nearly 2 trillion dollars of cash floating per day only 2% is invested in trade ,manufacturing or job creation.98% is put in speculation. 3. Are we de-skilling our workforce in the outsourcing game?As Naik a research scholar who has joined the debate points out-' The hassle is that "developing" nations are unwilling to put in that basic concept of "generation of thought" into their systems --- thus no absorption of higher concept possible too --- that is really going to hit us.' These issues are important and open fresh perspectives for thinking.

Comment by Naren Naik

Sun, 13 May 2007 23:08:03 EDT

Very interesting indeed. The driving psyche part especially. Some comments too --- given below. "We have to blame globalization and shareholder greed. Unfortunately it is not the same technology company it used to be, its future is driven by what's happening in Wall Street." --- describes the state and concept of present Bharat too ! "CEOs of these firms received 22.8 percent more in total pay than CEOs of firms that did not have layoffs" --- like the timekeeper in the mines getting paid higher to ring the bells "suitably". "Technology had a role in displacing the workforce. Throughout the 80's corporations used high tech machines to displace well-paid skilled workers. The sophisticated knowledge required to run machines was concentrated in the hands of a highly educated elite while the rest of the workforce was reduced to the level of keypunchers." Am not able to see matters in analogies with machines --- running machines is done at the lowest levels typically --- designing and analysing them at the higher ones. This needs a bit more thought by me --- as of now, the design work is done by a few in the "developed" west while all the bull-work is sought to be outsourced. No hassles there. The hassle is that "developing" nations are unwilling to put in that basic concept of "generation of thought" into their systems --- thus no absorption of higher concept possible too --- that is really going to hit us. Also, I am reluctant to accept the connotation of the "highly educated elite", since the highly educated are in fact financially worse off --- as seen in the dwindling numbers of local PhD seekers in the US itself.

Comment by Sanjay

Sun, 13 May 2007 21:46:23 EDT

sridhar, the developed economies don't have to go into a tailspin, they just have to shake off their business-as-usual complacency and develop new value to offer. You make it sound like the free market is a zero-sum game, and that every poor person who gains a job is then depriving some higher income person. Sorry, but the savings achieved from outsourcing don't get stuffed into a money mattress somewhere. They get reinvested into the market and create new jobs in the process. And those new jobs would naturally be based on new value offerings. By example, what if I could wave a magic wand and make half the US working population disappear? Would that suddenly mean a spate of newly vacant job openings, because half of the workforce is no longer showing up to work? No, because there would be a corresponding decline in demand. The converse is then also true - more workers means more demand. If outsourcing then increases the number of workers competing for jobs, it means that the overall quality of workers improves and the value to the economy has improved. The economy is then operating more efficiently. Furthermore, there is wage inflation occurring in India, so the current wage disparity is only transitional, until Indian wages catch up -- which they will. Cringeley has mistaken the name of a Six Sigma program, LEAN, for some type of explicit downsizing agenda. That's simply a sensationalist distortion on his part. He's really damaged his credibility with his latest piece.

Comment by sridhar

Sun, 13 May 2007 20:59:19 EDT

Sanjay, From the short term perspective the shifting of jobs augurs well for India. But the issues for concern stem from the long term perspective of outsourcing operations.Issues of concern are as follows: 1.Demand compression- The transfer of jobs from high wage to low wage economies means that purchasing power is reduced in the high wage economy.Such economies get into a tailspin. What about the domino effect on Low wage economies? 2.Political backlash in US/ Europe- when job losses are significant there is bound to be pressure on the political establishment to look closely at outsourcing. The President elect Sarkosy promised the French people that outsourcing would be prevented to save jobs in France. 3. If the supply of trained people in low wage economies is less than the demand then would the wage increases nullify the cost advantage? These are some of the issues for debate. Cringely has voiced his concern about the layoffs and the fact that IBM is doing damage control tells us that there cannot be smoke without fire. Lefties are full blooded capitalists now as West Bengal has shown us in the recent past.So do not anticipate any problems from them.

Comment by Sanjay

Sun, 13 May 2007 17:23:52 EDT

Read this: http://www.channelregister.co.uk/2007/05/11/layoffs_ibm_cringe/

Comment by Sanjay

Sun, 13 May 2007 17:21:47 EDT

Cringely is an idiot. He posted a US layoff number of 150,000 -- which is greater than the number of people employed by IBM USA (130,000) By the way, IBM should shift its employment to areas offering the most value. If India is offering more value, then why not? LeftiCritics.org wants to whine about Indians being out of work, but when work is being sent their way, then the LeftiCritics want to vilify that too. Stupid.

Comment by anonymous at IBM

Sun, 13 May 2007 14:36:55 EDT

Excellent article describing the problems at IBM as a poster child for many of the large US coporations. It will be interesting to see if IBM acts in similar vein as GE has done. LEAN may be just a way to milk the cash cow until the commodity services can be sold off. Stay tuned, but don't just stand by. Employees need to take care of themselves, the corporation won't take of them.

Comment by Soros

Wed, 9 May 2007 05:49:55 EDT

Anand Menon Thats a better one than mine.

Comment by Anand Menon

Wed, 9 May 2007 05:02:06 EDT

I.B.M stands for Intentionally Butchering Mothers

Comment by Soros

Wed, 9 May 2007 04:31:28 EDT

I.B.M what does it stand for??It means INTERNATIONAL LIVELIHOOD BUTCHERS OF MANKIND.

Comment by sridhar

Tue, 8 May 2007 21:59:41 EDT

Dear Anand, 'Indians may be happy about all that outsourcing coming to our shores but if its prudent to remember that if they go down we go down with them.' very true. Moreover,if there are wage increases on account of short supply of qualified people in low wage countries the strategic value of low cost economy is lost.Then the corporations would seek other low wage economies with lower wages.And so on.

Comment by sridhar

Tue, 8 May 2007 21:43:16 EDT

Dear Greg, 'Shareholder kiss assing will lead to a market place with no customers and eventually no shareholders, or at least no happy ones.' A very astute observation.The transfer of jobs from high wage economy to low wage economy also means loss of purchasing power in high wage economy which is not made good in the low wage sector. The result demand compression. Over supply of goods with diminished purchasing power leads to stagnating sales. This in turn leads to further payroll cuts and an unstable economy. Ultimately,this affects the low wage countries too.

Comment by Anand Menon

Tue, 8 May 2007 21:21:03 EDT

Neutron Jack's skills are being emulated and honed to perfection at IBM and elsewhere in the US.We are witnessing the rise of shell companies and that trend is disturbing.No nation can sustain this trend....no nation can afford to treat its educated white collar workforce like dirt without facing the fallout in the middle to long term.Indians may be happy about all that outsourcing coming to our shores but if its prudent to remember that if they go down we go down with them. The author has already hinted at the consequences of downsizing for all the wrong reasons and the phenomenon of white collar unemployment in his previous articles.here are the links http://desicritics.org/2007/03/18/052546.php http://desicritics.org/2007/03/28/084258.php

Comment by Greg McBrady

Tue, 8 May 2007 15:45:35 EDT

With a US workforce diminished by such massive off shoring, and other US workers forced to work for diminishing wages it seems IBM and other companies that play by this sword will inevitably lose their customer base as well as their workforce. Laid off workers don't buy tech gear and people struggling to pay for health insurance and retirement costs don't either. Ultimately this Ouroboros of CEO / Shareholder kiss assing will lead to a market place with no customers and eventually no shareholders, or at least no happy ones. Greg in Seattle

Comment by o

Tue, 8 May 2007 14:55:02 EDT

I'm confused, in the office where I sit, seven people are looking for new internal jobs since last week, none of them are from Global Services... I think the truth isn't Global Services they are just the public excuse

Comment by Jason

Tue, 8 May 2007 14:37:29 EDT

Thank you, that is one of the better articles I have read today on the rumored IBM layoffs.