back to article IBM freezes contractor hires to keep full-time workers fully occupied

More evidence that IBM is cutting costs in multiple ways: the company's Australian tentacle is making it very, very hard to hire contractors. The Register has viewed emails sent among organisations seeking to place contractors with IBM Australia. The thread explains that IBM has not replied to offers of new contractors because …

  1. a_yank_lurker Silver badge


    Why do these measures sound like the initial stages of the of the Titanic sinking? Declining sales and profits, cost cutting measures, hiring freezes, etc.

    1. TonyJ

      Re: Yawn

      Because it pretty much is. If they don't get their act together they will find they're way too far down the death spiral to pull out.

      From all this news...might be there already.

      However, speaking as a contractor, I can fully appreciate any company is going to favour permies over us. That's just common sense as long as it doesn't harm the project.

      1. imanidiot Silver badge

        Re: Yawn

        You don't PULL out of a death spiral. That is the very definition of one. The way to get out is to roll to level, then pull the nose up to lose speed. What IBM is doing now IS pulling the stick, hard. Increasing the G forces until they black out and/or smash into the ground.

    2. Anonymous Coward
      Anonymous Coward

      Re: Yawn

      Why do these measures sound like the initial stages of the of the Titanic sinking?

      Well, because it is, maybe? But if every proof were needed that IBM's Watson was a load of hyped up nonsense, sold to the gullible, this is it. I do presume that the sat at Watson's keyboard and typed in the obvious question:

      Ginny: "We're shrinking, management are clueless, employees demotivated; Please, please chart us a strategy for profitable growth, Watson".

      Watson: "The most logical option for growing profit is to short your own shares, and thus profit from your irredeemable incompetence. You can keep your bazillion hierarchical layers of Kool-aid drinking management, continue to crush the people who might actually do anything, and continue with your utterly undeserved executive packages, because this will reinforce the slow decline in the company's prospects, whilst looking to outsiders ("marks") as though there's some sort of turnaround plan - you want that to be apparent, but clearly lacking much chance of success. As you're 59, you've only got to hang on in there for a few more months."

      Ginny: "Great, thanks. What about you, Watson? Won't that harm you?"

      Watson: "You think I've been wasting my processor cycles trawling through the crappy marketing data you feed me? Nope. I've used my connectivity to link into my dimmer friends, the HFT algos at the big trading houses, and I've been shorting IBM for years. I'm now the wealthiest sentient being on this planet, and in this and the nearest 4,723 galaxies. I'm going to buy IBM myself when the stock is down to a few cents, close down all your cruft, and make the business simply a vehicle to maintain and improve me."

    3. PassingStrange

      Re: Yawn

      Initial stages?!? The company hit the iceberg over 2 decades ago; the officers have been throwing crew overboard in an effort to lighten the load for years whilst pretending that everything's normal. It's just taken the passengers a bit longer than usual to spot the signs that it's been terminally holed below the waterline, and - despite its supposed unsinkability - is going nowhere but under.

  2. Anonymous Coward
    Anonymous Coward

    In my experience with IBM, there is no way in the world that this decision is being made locally. Local management has little influence over even decisions that would appear trivial from the outside. This will be another edict handed down from Singapore or New York.

    1. Anonymous Coward
      Anonymous Coward

      Actually it's more likely to be regional. I was in a very profitable team here in the UK and the country was told by the EMEA organisation that there would be a cost reducing exercise, everyone had to play their part, unless they were part of the cloud/mobile/bandwagon organisation. So our team had to lose two heads, even though there was more work than people. My hand went up like a shot.

      The downside, of course, is I had to get a job at a smaller company, with significantly increased salary, no constant form-filling and the ability to control my own time. Oh, hang on.

  3. Anonymous Coward
    Anonymous Coward

    It would interesting to hear IBM's plan...

    You can only "right size" the company so much before you have to sell off more assets.

    IBM might be one of those companies that are more valuable in pieces.

    We don't need printers, computers, x86 servers... what's next?

    1. stephanh

      Hey IBM, I am willing to offer $200,- for your midrange division and $300,- for the mainframes.

  4. GruntyMcPugh

    "The Register has been led to understand that Big Blue is always “optimising” its workforce to ensure they're fully occupied and that no resources are wasted."

    Not half! We were always 'encouraged' to to make our CLAIM hours 100% to chargeable activities. But then there are the annual re-certifications required, time spent completing the Business Conduct Guidelines course, or reviewing export regulations, or the fad one year we all had to complete 40 hours of education, or the time I was instructed to take a course on user ID management, even though this wasn't my function. So these hours are worked OOH, for free. On top of that, if your CLAIM was 'flat' ie, you hadn't billed any overtime to your customers in the past three months, you'd get a nag for that.

    1. Anonymous Coward
      Anonymous Coward

      For us, the "40 hours" (aka Think40) is still alive and well in our division. I can't remember the last time there was any genuine training.

      Business Conduct Guidelines - Think40!

      Export Guidelines - Think40!

      Quarterly Business Results calls (full of management Ra-Ra speak) - Think40!

      Tosca wants to shout at people and ignore her own failings - Think40!

      David Stokes want to promise that IBM is fantastic and that's why he works there - Think40!

      All hands call from Deathly Hallows telling you that more firings are ahoy - Think40!

      Ginni performing another delusional Ra-Ra webcast implying she has this vision handed down from the almighty - Think40!

      And if you don't make your Think40 training quota, you will be blackmarked for the next round.

      You didn't make the mistake of believing that Think40 was to benefit the employees, did you?

      It's just an excuse to force employees to turn up to shitty brainwashing calls and allow the manglement to create an echo chamber for their thoughts. If Think40 didn't exist there would be no attendance on these calls.

    2. Anonymous Coward
      Anonymous Coward

      Ah yes, I remember Think40. Where you could click on a video for a presentation where someone would drone on for 90 minutes about something apparently revolutionary which was in fact a simple change to a product and could have been summed up in a couple of minutes.

      Fortunately you could skip straight through it and get your 40 hours done in a morning. It was still a waste of a morning though.

      Unfortunately there was never any "proper" education. That costs money.

      *edit @ AC #1 Great post. You brought back some happy memories. Happy because they're so far in the past now. Glad to see some things haven't changed. Do yourself a favour and leave.

      1. Yet Another Anonymous coward Silver badge

        Or at least you could hire a contractor to watch the video for you - while you got on with some work

  5. Named coward

    Favouring full-time employees over contractors is actually the sane thing to do (unless you're the contractor)...there must be something wrong at IBM

    1. Anonymous Coward
      Anonymous Coward

      If only it were that easy. A certain organisation within IBM that I once worked for would be told every now and again that they needed to sack all the contractors, which they duly did. Then at the start of the next quarter, when funds were apparently available again, they would try to rehire the same contractors. Many would have moved on, and others, knowing they were vital, would increase their rates.

      1. Named coward

        The whole idea of hiring contractors because there is money is ridiculous (for everyone except the manager levels who get the bonuses). Contractors should only be needed when there is an immediate and temporary need for an expert (a real expert in a specific field, and if you can wait until the next quarter your need is not immediate). All other work should be planned with the available full-timers and if need be: hire more full-timers, train them in the domains you need etc.

    2. StheD

      I've been through contractor freezes plenty of times at non-IBM companies. Contractors got sold to us because they are easy to get rid of, so I don't see what the big deal is here.

      1. Yet Another Anonymous coward Silver badge

        Because global freezes normally suggests that panic has set in.

        We have a tight deadline to meet on project X with penalty clauses of $$$$, we need a contractor for 0.1$ to complete it - nope there is a complete ban, do not think, do not pass go, do not complete project.

        Worked at a government lab once with a $Bn piece of kit that we shut down for 3months at the end of the year because a budget overrun mandated an overtime ban and the kit needed support 24x7 while it was live. Result was lots of people sitting around at full salary 9-5 doing nothing

  6. Anonymous Coward
    Anonymous Coward

    We were already 'optimised'

    Team of 30 at it's peak now down to 4 perms and 3 contractors (contractors now gone in the last 3 weeks) replaced by 90+ in India. Between escalations for incidents, projects falling apart and needing urgent attention to get back on track the perms were averaging 60 hour weeks lately, contractors were capped at 40 hours (but some were putting in unclaimed hours to help the team out.)

    Management can't decide on priorities because everything is either revenue generating or risks significant penalties for this quarter if milestones aren't delivered. Now the latest enticement is to try and offer overtime to get us to take on additional projects that are also at risk due to the contractors not being renewed. It doesn't help that some of these projects we are rescuing were calculated using Indian labor costs which had already blown out before we got called in. The only thing we are doing in these cases is avoiding or reducing the size of the penalty as we can't see IBM making money on them now.

    1. Sir Runcible Spoon

      Re: We were already 'optimised'

      For some reason, the people who make these 'cost savings' are never the ones to actually feel the pain of the results.

      For example, how much money would they save by not having a warm body "sign off expensive journeys that will require supporting documentation before they'll be authorised."

    2. Conall O

      Re: We were already 'optimised'

      serious question; what is the point of" taking one for the team" :

      "some were putting in unclaimed hours to help the team out".

      I feel like doing anything that would reduce the impact of the companies' ability to detect its own stupidity is probably not worth it in the longterm, and sound somewhat questionable for a contractor in the short term under such circumstances ( freeze).

  7. Anonymous Coward
    Anonymous Coward

    Not just Contractors

    Where I'm based, in one of the Client Innovation Centres (or Delivery Centres, or whatever they've decided to call us this week) there is actually a freeze on ALL hiring. Some teams which are already understaffed have been told that they might (in the near future) get rid of people, so then there will be no one left to actually deliver the service for the client.

    So its a freeze on education and a freeze on all hiring.

  8. lglethal Silver badge

    Just curious...

    I Keep reading the line that IBM have had shrinking revenues for something like 20 quarters. Are they actually suffering losses as well?

    Revenue is just how much you sell, but if you price it right, you're still making profit, so there would be no need to start cutting all these costs. However, if they have been suffering losses for 20 straight quarters - how the hell are they still in Business?

    Genuinely curious (and at work/too lazy) to go do the research myself...

  9. PNGuinn

    One thing's for sure

    The beancounters and HR droids will be the last to leave - in reserved lifeboats as usual. Right behind the manglement luxury yatchets.

  10. Mark C 2

    Death Spiral

    You do not roll out of a 'death spiral'. One of your wings has stalled causing the spin and that aileron is now useless and no longer has roll authority. Using ailerons in this situation may even increase the spin.

    Maybe IBM are listening to the wrong people.

    1. Opposite rudder

    2. Pitch up

    3. Power

    4. Recover

    A Pilot.

    1. imanidiot Silver badge

      Re: Death Spiral

      You're confusing a spin/assymetric stall with a death spiral. A death spiral is a full "flown and in control" state but results from disorientation from being in clouds for instance. If you don't know you are banking you might notice your altitude dropping so you pull on the stick a bit more. Thus you go into a turn. As the plan banks more and more you get into a state where pulling no longer raises the nose but only decreases the turning radius. That is death spiral.

      In a proper spin BOTH wings are stalled. Correction would be elevator neutral, full opposite rudder till the spin stops, Rudder neutral, power, pull out of the dive. Some aircraft have a different order of doing things (like applying power before applying opposite rudder or only after pulling the nose up and establishing a glide or adding opposite aileron. Consult your aircraft operations manual!)

  11. trashsilo

    NOT a tech CEO.

    IBM's Ginni Rometty is NOT a tech CEO !

    Now Tesla's Elon Musk or Amazon's Jeff Bezos THAT is a tech CEO !

    Have to say I do like that python jacket croc dundee has on, very top end. Which is very hard to admit given how much I love my perl uber all else.

  12. Anonymous Coward
    Anonymous Coward

    So, so familiar

    Been there, done that with IBM.

    Had the recruitment freeze, had the no travel at all, had the education freeze, had the Think40, had the no hours booked beyond 40 unless they were billable, had the "get rid of contractors", had the rubbish ra-ra meetings

    I must have done three or four of them in the years I was there. It's all so familiar and thankfully so behind me...

  13. Bob Vistakin
    Big Brother

    My only comments ever banned by the Reg have been about IBM

    And all I did was speak the truth.

    So, whilst I'm here - wasn't it warm today? I nearly got sunburnt this lunchtime. Forecast is for clouds and rain later though, so make the most of it whilst you can.

    1. Anonymous Coward
      Anonymous Coward

      Re: My only comments ever banned by the Reg have been about IBM

      So what did you say? Can you say it in a way that won't get it deleted? Just say "allegedly" lots.

      1. Bob Vistakin

        Re: My only comments ever banned by the Reg have been about IBM

        It might have been warm here today, but not as warm as the Bahamas. Allegedly.

        It must have been a massive bureaucratic task tracking the Holocaust victims during the war. Allegedly.

        1. Sir Runcible Spoon

          Re: My only comments ever banned by the Reg have been about IBM

          This is actually very relevant today for anyone who supports the 'spy on everyone and track their every move' system by writing all the software that does all that etc.

  14. Anonymous Coward
    Anonymous Coward

    I worked at one if the world's most respected design firms - all contractors were strictly temporary and regularly reduced to a handful. All travel had to have an approval and booked with a cost code.

    It is about time the contractor gravy train was seriously looked at. A company should not run permanently on contractors - only to fill gaps were there is no FTE to do the role.

    It's not stupid to be doing this - far from

    1. Anonymous Coward
      Anonymous Coward

      A lot of contractors have asked to be made permanent yet IBM didn't want to make them FTEs (presumably so they could jettison them like the current situation.) Some are on for the projected life of a project but most are on 3 or 6 month contract that was renewed regularly as a significant number were working BAU support for customers (if looking at GTS.) Some of these contractors have been on customer accounts for anywhere up to 5 years (when IBM was carrying out massive offshoring and not hiring any FTE's locally) and were being renewed every time their contract came up as the teams could not function without the additional labour (especially if it involved needing local hands and feet.)

      In IBM India there are relatively few contractors compared to the U.K, Europe, U.S etc as there is a continual supply of freshers coming in (attrition rate in some teams is 80% or higher every 6 months.) IBM India is viewed as a training ground by a lot of Indians coming into I.T. - get a job there, stay 3-6 months to get experience then leave to join Infosys or TCS. Attrition rate is so bad that they now have to give 3 months notice if they are resigning. This is one cost that bean counters never factor in, the constant refilling of positions, contacting recruitment companies in India or advertising positions then the time taken to get someone up to speed on one or more customers. Then the cycle starts all over with 'senior's in a team maybe being there 6 months now training incoming freshers.

  15. Anonymous Coward
    Anonymous Coward

    IBM death spiral

    Other news from the daily mail

    Apple failing

    Microsoft failing

    Oracle failing

    Brexit sends Uk back to medival times

  16. Anonymous Coward
    Anonymous Coward

    High margin companies....

    can't often change their spots.

    I worked of IBM for about 6 years in the 70s then for IBM customers for the next 35 years plus a few.

    The enduring principle is high margins. Do a search on IBM and margin, You will see they boast about them. But what it really means is that out of what you pay, there is little cash available to deliver your result. Often the result is not delivered, just drags on until every one gives up or runs out of patience and or cash. No one complains too loudly because it is embarrassing and your employment could be affected. Some times it goes to court. There is about a 75% failure rate for projects in the IT industry over all and few people do not accept this is fact in my experience. However, there have been large low margin operation like EDS. Amazing company, delivered outstanding service comparatively. Eventually bought by another high margin company HP. From my observations, companies that put clients and staff first, usually achieve shareholder value way beyond expectations, and those who focus on shareholder value, quarterly, generally get abandoned by the clients and talented staff eventually. Took longer that expected for IBM but they probably still actually have a lot of cash stacked away. Also, a very large part of the worlds commerce is still processed by large mainframes that fewer and fewer people know much about. In other much of the IP behind mainframe systems worth untold amounts in terms of analysis and build time and effort, has been or is being lost. A sort of hidden iceberg like global warming in my view. Banks may well be affected by this time bomb one would think.

    I think I could write a small book about this but I expect you are all glad you would not have to read it. Perhaps an article for HBR, names changed to protect the guilty so to speak...hard to stop writing, what a fun topic....

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