Recent news in 2010 showed IBM continuing to lay off North American employees. Last year, it was estimated that IBM eliminated over 10,000 jobs in the United States and Canada while the work for those jobs has been moved to other countries, according to former employee reports and reports from the [email protected], an organization trying to unionize U.S.-based IBM employees.
IBM will not confirm the eliminations.
You see "global integration" of IBM operations mentioned a fair amount in the report. If you are wondering what that means, put it in the context of what IBM calls "workforce reduction actions"--something it has done with regularity in 2009, but gets no more explanation than this in the following statement: "In response to changing business needs, the company periodically takes workforce reduction actions to improve productivity [and] cost competitiveness and to rebalance skills."
It appears that explanation isn't enough for Mr. Sears, who wants IBM to offer more details about its shifting employment base. IBM's not required to by any law, and it has chosen not to do so. And that decision, says Mr. Sears, is what's so terribly wrong:
It's easy to focus on earnings, but it's harder to focus on what you did to get those earnings in a year where you admitted revenues were down. Why can't you let shareholders know that you are chopping U.S jobs and replacing them overseas to benefit from foreign tax deferral and improve the bottom line?
And in "chopping U.S. jobs," Sears says, IBM is also "becoming a model company for killing good U.S. jobs while it supports the need for more H-1B visas within the United States and benefits from foreign tax laws. Kill off U.S. jobs, keep the dividend strong and keep your marketing 'smart.' "
Sears then cites IBM's claims in its annual report that it has "quadrupled our earnings per share and more than doubled our free cash flow. Cumulatively, we have generated about $80 billion of free cash flow," and asks this question:
"Did you add up how many lives you have ruined?"
Sears concludes his condemnation of IBM's practices with this line: "If this is what all this 'smarter planet' marketing is about, then, yes, IBM, you have outsmarted many, and are helping to make the United States a poorer part of the planet."
I'm sharing these excerpts because they seem to indicate a belief that companies exist to employ people-and in particular, to employ Americans. That's a quaint idea, and in different times-very different times-it often held true: U.S.-based companies did most of their business in the U.S. and had most of their customers in the U.S. and had most of their employees in the U.S.
But the simple fact is that is not how IBM's business and most other IT companies' s businesses operate today. These are global businesses with global customers that demand and deserve globally balanced and globally focused workforces from their IT suppliers.
IBM's primary responsibility is to its customers, and its commitment to its employees comes second-after all, without customers, there's no reason to have employees. And to the degree that IBM's customers care about IBM's deployment of its employees around the world, those customer concerns are focused very tightly on ensuring that IBM employees are in locations that give those customers the greatest level of value and the greatest chances for success. They don't give two hoots about what percentage of IBM's employee base is or is not in the U.S.-to them, such details are at best a fringe abstraction.
And since that's how IBM's customers feel, it is very much in the best interest of IBM and its shareholders and, yes, its employees to think and behave the same way.
But those U.S.-employment numbers appear to be an obsession for Sears-and in the detached world of blogging about the IT industry, he is absolutely entitled to have such an opinion. The bigger question, though, is whether Sears' commentary is relevant to the CIOs who buy from IBM, and to the decision-makers within IBM.
I grew up in a steel town and like so many people in various parts of the U.S. today, I understand first-hand the difficulties and hardships that come with job displacement, unemployment, and uncertain futures. But the only way to begin overcoming those difficulties is to recognize reality, and to separate what is from what we wish it could be.
Maybe Sears should aim some of his considerable venom and indignation at the lawmakers in the U.S. Congress who have burdened this country with one of the highest corporate tax rates in the world. Because Sears seems to want to find and tar a villain-and in this case, that villain is most certainly not IBM; rather, it's the legal framework that forces IBM to take its business outside of the U.S. not only to meet its customers' needs but also to escape the brutal tax burdens imposed by the very country that Sears so mistakenly claims is being impoverished by IBM's greed.