05/01/2009 05:12 am ET Updated 6 days ago

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 The patent was introduced on March 26th according to Slashdot and withdrawn three days later, the same day that IBM cut 5,000 high tech jobs in the US.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week, Big Blue's spokesperson Steve Malkiewicz gave the same reason that had been given when the original patent was withdrawn.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.