IBM to Terminate all U.S. Regular Employees and Go To All Contractor Labor Force.

This is the latest and greatest rumor on the streets. Word is that it will be this year. Just wanted to post it for the record in case it does happen. And if you really think about it, it's not so farfetched a possibility. IBM was one of the pioneers in outsourcing and firing people just short of their full pensions kicking in and raping retirement funds of their employees to make their pretend profits look good for their "stockholders,: so why not this?

But no worries...companies providing contractors with services and benefits already exist, at higher costs and for profit, of course. And just think of how much less paperwork a company like IBM would have to do if they went this route

[Didn't know whether to put this here in The Gray Area or in the Predictions forum, but it's not really a prediction, so...please move at will.]

Doesn't have anything to do with the new health care law I'm sure. I think this will become the new norm so that companies will not have to carry insurance on employees that they normally wouldn't have to insure.

reply to post by SpaDe_

My friend who works for IBM already pays (oops) over $500 a month for himself and two dependents and has been doing so for at least a decade on an ever-increasing basis. IBM was a pioneer in that little charade too...this little plan to attack things like healthcare benefits and pensions and raises and such long precedes and predates "Obamacare."

I see it happening already with office buildings,hotels and hospitals.

Instead of having their own personnel to do the maintenance and housecleaning,they are giving those jobs to sub-contractors.
Release alot of liability from themselves and is cheaper.
But the job is still there,it's just moved from one handler to the next.

reply to post by kdog1982

Yep. Totally right. And IBM along with a few other Fortune 100 companies also pioneered and encourage the crock-of-spit that the old "the future of American companies is in the "services" industry too. My question then was and still is...who's going to pay for all these "services" if we produce nothing and earn nothing?

Originally posted by ~Lucidity
reply to post by kdog1982

 

Yep. Totally right. And IBM along with a few other Fortune 100 companies also pioneered and encourage the crock-of-spit that the old "the future of American companies is in the "services" industry too. My question then was and still is...who's going to pay for all these "services" if we produce nothing and earn nothing?

There will always some country producing,depending on the cost of labor and the access of raw materials.

We will be at the service of China.
Sort of a slave,if I might be so bold to say.

Oh,and btw,those jobs involving service will be only part time because of Obamacare.

finance.yahoo.com...

Small businesses have been doing that since Obamacare passed. No one will be an "employee" after while and will have to pay the TAX for "health insurance". Just another way business protects itself from the government.

reply to post by ~Lucidity


There is no way IBM is laying off all US employees and going contractor only. Their bread & butter is Hardware, Software, and Services. That's the trifecta of IBM's current success (and clever marketing too).

Plus the CEO, Rometty, just put two people in charge of the Services Division instead of one - it's *that* important to IBM that Services is run smoothly while generating huge profits.

This rumor is BS.

reply to post by kdog1982

Sort of respectfully disagree. The old "make employees part-time to avoid paying benefits" deal isn't new either. IBM, Walmart, and oodles of other companies have been doing that for decades too. "Obamacare's" just the new scapegoat for that. In addition, to try to alleviate that "wrong" there was a redefinition of what constituted full-time labor along, but the same people who screamed about and blamed Obamacare for all this, screamed about that for some reason too.

Originally posted by Jason88
reply to post by ~Lucidity

 

There is no way IBM is laying off all US employees and going contractor only. Their bread & butter is Hardware, Software, and Services. That's the trifecta of IBM's current success (and clever marketing too).

Plus the CEO, Rometty, just put two people in charge of the Services Division instead of one - it's *that* important to IBM that Services is run smoothly while generating huge profits.

This rumor is BS.

edit on 9-1-2013 by Jason88 because: (no reason given)

and much of this, including services, has been contracted out as well as offshored since the early 90s. IBM has been fiddling with the beans to make it appear their profit margins were holding for quite a while now. Only a matter of time before their next big "innovative solution" is implemented to maintain this facade. Again, I'm just saying it's not outside the realm of possibilities. .

Shoot, IBM has "buy" all over on the street - it's in a strong position and Services was it's number two profit generator (58 percent of total revenue) last year. In fact, HP (bigger than IBM) is restructuring to put more emphasis on Services.

The *only* reason I could see this not happening is current laws regarding classification of employees versus contractors. If a person has to work company-mandated hours, company-mandated procedures and using company tools, probably an employee. I think this move would force a boat-load of SS-8 forms (determination of worker status) being sent to the IRS. Mind you, another reason to move to contract labor is avoidance of the employer portion of the FICA taxes - the "contractor" would be responsible for paying both halves.

IRS Information

reply to post by ~Lucidity


Yes, the IBM certified contractor world is huge. And yes those contractors cost more and are (sometimes) better distributed globally to reach IBM clients. But no, I don't believe IBM is moving the beans around - they have cash flow, they just acquired two big companies in the last six months.

I get that this is not outside the realm of possibility, but frankly it makes no sense. IBM is a blue chip brand, as American as apple pie, and has a innovative workforce (world class) that it won't jeopardize by playing with the numbers. They're successful in their own right, they don't have to fudge the numbers.

Side note - Nobody goes overseas for creative solutions. You get great workers in India and China - not great thinkers. IBM invests heavily in great thinkers, and innovators - these folks come from Western countries or are trained in Western Countries.

reply to post by Mountainmeg


Yep. But a company who figured out so many clever ways to break contracts (implied or not) with employees with things like 24.9 years of service, discriminate against older employees, cut raises and bonuses and benefits, and "convert" pensions to save millions if not close to billions, might not have that tough a time with the lil ole IRS or these kinds of pesky regulations.

reply to post by Jason88

Really? Their workforce is down to what in the U.S. now? From what? Great thinkers at a cheap rate maybe? Great thinkers that can't possibly be from the U.S. where we just know all our kids are so "dumb" that IBM was instrumental in (ab)using the H-1B (I think it was H1-B_work visas to support this claim and spends billions educating children in other countries for their cheap "workers?" Sorry, I guess you can tell by now I don't have a lot of respect left for this once truly innovation and great American company.

Originally posted by ~Lucidity
reply to post by Mountainmeg

 

Yep. But a company who figured out so many clever ways to break contracts (implied or not) with employees with things like 24.9 years of service, discriminate against older employees, cut raises and bonuses and benefits, and "convert" pensions to save millions if not close to billions, might not have that tough a time with the lil ole IRS or these kinds of pesky regulations.

Unfortunately, I agree with you. Especially when those big ole' corporation have so many K street lobbyists.

reply to post by ~Lucidity


I have to work with them daily - there's still great people at IBM.

But, you are right and admittedly I let my nostalgia not hunt out the facts:

"In a symbolic shift, IBM's India workforce likely exceeds U.S."

Source: www.computerworld.com...

For years, IBM was an exception to this industry practice. It reported its U.S. employment until 2010, when it released its annual report without a U.S. headcount breakout.

The last time that IBM made a public statement about its U.S. workforce was in congressional testimony in the fall of 2009, when it put its U.S. workforce at 105,000. It was at 121,000 at the end of 2007, and more in previous years.

At the time that IBM stopped reporting its U.S. headcount, it was beginning to appear that India was on trajectory to surpass its U.S. workforce. Crossing such a threshold is a symbolic shift more than anything else -- a globalization footnote. With a global workforce of 430,000, less than a fourth of IBM's employees are in the U.S.

Also, I do know it to be correct they fired loads of people ahead of retirement - I believe that was around 2009 - right in line with not reporting headcount.

I'm not backtracking on all statements - IBM is a great American company, and highly doubt they're going to mess with its profitable Services Division. But that said, with the visas and getting solid talent at bottom tier salaries, it's a shame what has transpired.

Who's to blame? I say us, Americans. We all wanted our flat screen TVs, our lines of credit, our new car every 2 years, and a house we couldn't afford. We priced ourselves out of the market for selfishness and greed.

Truth is, not everyone can be rich. Even if Visa, MasterCard, BoA, Ford and likes tell you so (not you).

yea - these companies make me sick - they forget the reason why they became great, ie the employees and they forget the reason they exist ie the customer.

It is all about the CEO and his cabal getting more money.

The people making these decisions are like corporate raider Gordon Gekko in the film Wall Street.

reply to post by Jason88


The way they've played the game is sad.

articles.businessinsider.com...

reply to post by HelenConway

They sure do forget who helped make them great. Andnow they also have people so terrorized about losing their jobs, those people take what they can get, which is longer hours, fewer days off, less pay, and overall lower quality of life.