IBM Trifecta: Files For Offshoring Patent, Offshores Jobs, Applies for Stimulus Funds
IBM is currently seeking $30 billion in stimulus money to create 1 million jobs. CEO Sam Palmisano even met with Obama at the White House to discuss IBM's role in the economic recovery. But critics want to know whether those jobs would be in America or offshore. After all, over the last 3 years, IBM simultaneously took $45 million in aid from the state of New York to create jobs while surreptitiously sending thousands of American jobs overseas. In the worst case scenario, a portion of that $30 billion stimulus could fund IBM's efforts to help American companies outsource jobs more easily, since just last week Big Blue submitted a patent for software that would make outsourcing easier for everyone.
While many companies practice outsourcing jobs to countries with lower wages, IBM is among a handful that proactively makes outsourcing easier for companies around the globe. Big Blue recently refiled a patent for software called Outsourcing of Services, which helps corporations move jobs offshore while maximizing tax breaks. The patent was introduced on March 26th according to Slashdot and withdrawn three days later, the same day that IBM cut 5,000 high tech jobs in the US.
In 2006, IBM filed the same patent for an offshore outsourcing tool but withdrew the patent in 2007 when it came under public scrutiny. A month before pulling the patent, however, IBM discreetly filed an updated patent for offshore outsourcing software under a new, more benign moniker, Method and System for Strategic Global Resource Sourcing (MSSGRS).
When IBM canned the patent last week, Big Blue's spokesperson Steve Malkiewicz gave the same reason that had been given when the original patent was withdrawn. "It is contrary to IBM's patent policy on business methods," said Malkiewicz.
IBM's offshore outsourcing software is a complex tool that combines statistical analysis and actuarial math with qualitative analysis to automate the process of pinpointing the cheapest, most exploitable human capital on the planet. According to the patent description, it analyzes:
qualitative and quantitative attributes that influence performance of sourcing strategy with respect to one or more quantitative measures, quantifies an impact of said qualitative attributes using said one or more quantitative measures, and optimizes the sourcing strategy.
Lawmakers, IBM employees, and union leaders across the country have expressed outrage that IBM is asking for taxpayer handouts while aggressively engaging in offshore outsourcing of American jobs. IBM is one of the world's largest global sourcing firms, meaning IBM helps lots of other companies to send jobs offshore. It is impossible to determine how far-reaching IBM's offshore outsourcing tool is (beyond the thousands of IBM's own employees known to have been offshored) because no one knows how many jobs IBM has offshored at client companies.
Last week, IBM began notifying high tech employees that they had been selected for IBM's Resource Reduction Action -- IBM's polite way of saying, "You're fired." Many have reported to Alliance@IBM that they are being required to train their replacements who will be based on India, China, Asia Pacific, or Latin America. According to the Wall Street Journal, this month's layoffs will total around 5,000 jobs. This round follows nearly 5,000 job cuts made by IBM in January and February.
After the current round of offshoring, the Wall Street Journal estimates that 71% of IBM's workforce will reside outside of America. IBM employees in Rochester who were laid off last year were already voicing anger at seeing "job descriptions for their old positions popping up in China."
Rep. John Hall (D-NY), who represents upper New York, condemned IBM for offshore outsourcing, calling IBM "unpatriotic and un-American," and he requested a Government Accountability Office (GAO) investigation into whether IBM used government money to fund the development of their Outsourcing of Services software.
State Assemblyman Greg Ball (R-99), who recently filed to run for Hall's Congressional seat in 2010, has called for a State Assembly hearing into the $45 million in New York state aid given to IBM through an Industrial Development Agreement (IDA) intended to create jobs. In a formal statement, Ball said,
Yesterday, it was reported IBM would lay off a massive number of U.S. employees in Global Business Services (a division that includes IBM Sterling Forest in Orange County, IBM Poughkeepsie in Dutchess County and IBM Research at Ossining in Westchester County) and replace them with workers in India...
Who was at the bargaining table and negotiating table? Who was there whey they cut this deal to create jobs in 2008, that are now gone in 2009?
Currently, the state of New York does not require companies to disclose compliance with IDA agreements, but a bill pending in the State Assembly would change that.
Lee Conrad, former IBM employee and National Coordinator of Alliance@IBM, said that IBM knows how to play the system so that even IBM's own layoffs are often obscured from the public eye due to loopholes in the Warren Act, which requires companies to report mass layoffs. He says Alliance@IBM has been receiving reports of layoffs from IBMs largest employment centers (i.e., upper New York, Minnesota, Iowa, North Carolina's research triangle, Vermont) and from workers who telecommute from remote locations all over the country.
IBM layoffs are affecting every part of America. We're getting reports of IBM layoffs everywhere, and they are accelerating. IBM is abandoning the U.S. workforce. Executives aren't being offshored, but the workers are.
These are the jobs they told us to train for when manufacturing went offshore. The continued shifting of these jobs offshore is endangering the country's economic recovery.
Sources inside IBM say to expect more layoffs in June.
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All I can say is, email the President. After reading this article, that was the first thing I did...
Kudos to IBM - What a great pro-American and patriotic corporation - they make me proud...
IBM's gross profit in 2008 was 45.66 Billion dollars, and apparently that is not enough.
They still feel the need to crush the American based IT workers even more in 2009 and continue to send all them American jobs to the 3rd world armies they continue to build right under our noses with absolute impunity. It is despicable...
Yoohoo - President Obama and our new "change" government - where are you?
It sounds as if the Left hand does not know what the Right hand has been doing. Now that this has been illuminated, we will have to wait and see if the State / local / federal government will step in.
Where are the "stimulus funds" are coming from? If they are from the ARRA funds, then it is up to the STATE to assure that the funds are spent in their STATE, to save or add jobs. If IBM received money from NY in the past, what does the Gov of NY have to say?
More information is needed for a "populous uprising" as seen against AIG / AUI (the witness protection program name).
Personally, I blame it all on the spreadsheet (Lotus 1-2-3 and Microsoft Excel).
When you encapsulate your business as a set of "cells" on a spreadsheet, it's inevitable that a cell will indicate that a $20/hr Indian software engineer will save a lot of money over the American $75/hr software engineer.
What the "cell" doesn't say to the greedy IBM executives is that they are destroying the American middle class and down the line the American Market which has been so integral to their success. These IBM executives send their kids to American schools, enjoy our infrastructure and freedom, all while they shoot the country in the back.
President Obama said often in the 2008 campaign that he would take tax breaks away from American corporations that ship jobs overseas. Might be a good time to make an example of IBM.
Great post.
To be fair its Palmisano's JOB to be trying to get his hands in every cookie jar. thats what he is paid to do, look out for his shareholders.
Its Govt's job to look out for what it thinks will benefit its citizens.
two different entities. why blame IBM?
So what do you do for a living? Can they send your job offshore? Could you be replaced by someone willing to work for less?
Just last week, IBM announced that they are laying off 5K American employees and taking their jobs to India. I have been outsourced too many times and now I am competing with more people for the dwindling domestic IT jobs. I am almost too tired to get angry...almost.
They don't need a dime if they are a international company over a national one. Let them go on their own.
Since as we've all been told by the banks and financial institutions that you can't tell which money was from the government intervention funds and what came from company revenue, hense it's all right to spend some of it for whatever you want, we're going to hear the same thing from the multi-national corporate entities when it comes to the stimulus funds. Of course none of the stimulus funds will be used to create overseas jobs, that will come from other income sources. We're just going to ignore the fact that the stimulus funds opened up those funds to be used for overseas expansion.
IBM isn't going to be any more hypocritical than almost any other one of these companies. They probably just got the publicity first. Few have noticed that on 31 March Boeing announced "Boeing Opens India Research and Technology Centre to Advance Aerospace Innovation" which is billed as a Boeing/Indian government effort. What it isn't being billed as is a method to eliminate more American Aerospace jobs, especially unionized Engineering jobs.
The dance goes on.
Boeing, GE, IBM....the dance does go on...or as this article properly identifies, "play the system". So, if you have your hand out to take taxpayer money to create jobs, then you get none if you are not creating jobs where that taxpayer money is from - plain and simple. China, India, Latin American countries - they can foot the bill if that is where the jobs are to be created.
This has to stop. No more taxpayer money for the most absurd requests imaginable. There won't be any taxpayer money to draw from if we continue to dwindle the tax base.
Hopefully this administration will stop the "play the system" and recognize it for what it is instead of "back slapping" corporate buddies and continuing what has been going on for at a exponentially rising pace over the last 15 years (at least).
Looks like Mr. Palmisano lost his mind a little, there. IBM made over $12 billion last year and is squarely in the black. What does it need money for? Stop paying dividends to the shareholders and invest your earnings, for heavens sake.
See Dawn Teo's Profile
To be fair, Palmisano is lobbying for stimulus funds, not bailout money. It's ironic that you made this comment, though, because some critics have concerns that requests for stimulus money (which creates new jobs) will be mistaken by the public to be requests for bailout money (which saves old companies). It seems those critics are right.
The stimulus funds are supposed to get Americans working. Why does he need stimulus funds to create jobs then when he's cutting jobs here?
the critics may be right about the confusion in stimulus vs bailout. But if you are lobbying for or receiving any US stimulus money, it should be to create US jobs, performed by a US workforce. I certainly hope the government handles the criteria for recieving stimulus money a lot better than they have the bailout money. Because companies like IBM will abuse it, or find any loop hole they can to get the money, offshore the work, and line the CEO and share holders pockets with the profits, at the same time, further burdoning the US economy with sending thousands more to the unemployment lines.
KTM,
The sole fuction of a company is money. What do you need money for? What does anyone need it for? Why does Sam Walton need hundreds of billions? That never stopped him from getting it did it? Your post made zero sense.
Can you imagine the board of directors of IBM sitting around at a meeting going "What do we need money for?"
Never happen.
"What do you need money for? What does anyone need it for?"
So we should all just apply for any and every loan and line of credit we can obtain? That's entirely irresponsible. Your post makes zero sense. So his applying for "stimulus money" to create American jobs would be deceptive, wouldn't it? Kind of if you took a home improvement loan from a bank and bought a Mercedes with it, right? So outright lying to take taxpayer money to do exactly the opposite of what your track record shows is acceptable?
There's a thing that used to be practiced called "corporate responsibility". I know it's been missing for well over a generation so some may not know or even realize it ever existed, but it did. The "Captains of Industry" from long ago for the most part practiced it as they realized they needed wage earners with adequate compensation to buy their crap to keep their money and profits flowing. Examples: Milton Hershey, Henry Ford, JP Morgan, Andrew Carnegie.
So to your point a corporation’s only goal is to make more money by becoming more profitable year after year. But we have seen that employees or as they call them now, Resources, are simply another commodity that they will try to lower costs on.
And in that vein at some point in time Major US corporations will be housed in buildings with 15 or 20 offices because the only room they will require will be offices for the Board of Directors since all the other work will be done offshore.
If that is how a corporation wants to do business that is fine except they should not get Tax Breaks and Incentives to move jobs to lower cost markets. And at some point if the company has more employees or even contractors outside of the United States they should enter a different category than a US Company. Perhaps that company is now a Multi-National and the taxes go up.
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