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IBM, amid layoffs, scours globe for IT talent

Posted: 27 Sep 2005     Print Version  Bookmark and Share

Keywords:it  pc 

Even as IBM completes plans to lay off 14,500 workers, Big Blue is continuing to scout for new IT talent and hiring professionals around the world.

Though the company is long past the tough times of the early 1990s, it nevertheless remains in the midst of what former employee relations director Harry Newman characterized in a 2003 Webcast to IBM executives as "unprecedented transition."

Newman and the company's other human resource executives foresaw that globalization would be one of the most important factors in the restructuring of the world's largest information technology company through 2006.

Big Blue's employment peaked around 1985, when it had about 405,000 workers who were acclimated to a long tradition of lifetime employment. In 1992, the company suffered a $4.97 billion loss, the largest annual corporate loss in U.S. history to that time. By 1994, the workforce had shrunk to 219,207.

Under CEO Samuel Palmisano's predecessor, Lou Gerstner, the company revived with a renewed focus on business consulting. Despite periodic layoffs, including more than 14,000 job cuts in 2002, the number of IBM employees had rebounded to 329,000 by the end of last year. About 150,000 of those positions were in the United States.

The company declined to provide TechWeb with current figures for its total workforce, but estimates are around 320,000. IBM boasts of having one of the most highly educated workforces in the world. An estimated 200,000 are college graduates, and at least 54,000 reportedly have post-graduate degrees. An estimated 195,000 are IT professionals.

Less than 50 percent of current employees have been with the company more than five years, according to Alliance@IBM, a chapter of the Communications Workers of America.

In May, IBM completed the sale of its PC business to Lenovo, a China-based computer maker, and announced 14,500 job cuts. Between 65 and 70 percent of the cuts were aimed at Europe, the Middle East and Africa.

The company has not announced how many of those layoffs are in the United States. According to Alliance@IBM, which has been attempting to track the layoffs, several thousand of the cuts are aimed at U.S. jobs.

A recent check of the company's job listings showed openings in the North America, Asia, Australia and South America. More than 900 jobs were advertised in the United States, 134 positions were posted in Brazil and 104 slots were open in Canada. No job openings were posted in France, and less than 25 jobs were advertised in England.

While opportunities for IT professionals in Europe are scarce, IBM announced plans last month to double the number of employees in Brazil to 8,000 by the end of next year. The company also plans to add about 14,000 programmers in India, where it currently employs nearly 40,000 workers, according to Communications Workers of America.

IBM also appears to be focused on emerging markets in Russia, China, Brazil and India -- areas where the economy is expanding and labor is inexpensive. Overall revenue was at $96 billion in 2004, with 75 percent revenue growth in Russia. In India, revenue rose by 45 percent. In China, it shot up by 25 percent, and, in Brazil, revenue grew by 15 percent.

"We have been shifting our investments to capitalize on the areas where we see the best opportunity," Mark Loughridge, IBM's Senior Vice President and Chief Financial Officer said earlier this year while presenting IBM's second quarter earnings. He said the restructuring, or job reduction, is expected to yield savings of about $500,000 this year and $1.3 billion next year.

"These two actions, the sale of our PC business, and restructuring actions, are designed to improve our competitiveness and support our longer term objectives of double-digit earnings per share growth," Loughbridge said during a Web cast earlier this year.

The strategy is drawing some criticism from union organizers. "It's clear that IBM is systematically eliminated good paying, skilled technical jobs in the United States in order to expand its operations in India," said Lee Conrad, national coordinator for Alliance@IBM.

A recently released survey by the Society for Information Management showed that one-third of IT staff positions will be outsourced by 2008, and a growing number of reports state that IT workers are jittery about the job market.

At the same time, the U.S. Bureau of Labor Statistics shows increasing staffing levels among companies that offer IT services. The number of working IT professionals was at 3.43 million in the second quarter of 2005, nearing the levels in 2001, when the number was 3.46 million. A recent InformationWeek analysis shows that the United States gained 128,000 IT jobs from 2004 to 2005, or 3.9 percent.

JupiterMedia is predicting increased IT sector hiring, for a net increase of 12 percent, during the remainder of the year. Robert Half Technology reports that companies are adding IT staffing while the number of computer science graduates decreases. Those trends are expected open the market for applicants.

In fact, IBM announced a new recruiting effort Friday, citing the declining number of computer science graduates as a concern. IBM plans to invest $700 million this year in workforce education and development. Of that, $400 million is slated for what the company calls market-valued skills, or hot spots, like Linux and wireless technologies, according to Corporate Media Relations specialist Kendra Collins. IBM has more than 300 Linux kernel developers.

IBM's focus continues to be on business consulting, which Gerstner identified as its key to future success. "More than half of IBM's current hiring slots are in IBM's Business Consulting Services area," Collins said. "Outside BCS, we are looking for traditional kinds of skills and knowledge - software developers, middleware specialists, security and privacy specialists and content management experts."

Under the umbrella of business consulting, IBM is looking for specialists in: customer relationship management, financial management, human capital management, SAP Enterprise Applications, strategy & change and supply chain management.

- K.C. Jones

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