Laid Off IBM Employee Says The Company Is Blowing It By Cutting The Wrong People

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Getting a job with IBM used to be the pinnacle of an IT career. Not so much today.IBM is trying to strategically reduce headcount, and has laid off nearly 2,000 people in 2012.

It also suffers from a corporate culture of cronyism that is costing IBM dearly, a former employee told Business Insider.

Note that in its last quarter, IBM’s big services business, responsible for 57 per cent of revenue, reported $15 billion for the quarter and grew a negligible 1 per cent. But its profit rose 11 per cent.

These cuts are affecting the company’s business:

  • Last month, Disney cancelled an IBM contract worth over $100 million annually, reports WRALtech.
  • Texas booted IBM out of an $863 million, seven-year outsourcing contract. Last month, it awarded a $1 billion contract to IBM’s competitors.
  • The state of Indiana cancelled a 10-year $1 billion contract with IBM in 2009 and this year has been suing to IBM to get back the $437 million it had already paid.

In recent years IBM has also lost other contracts, including one at the Department of Energy, the source told Business Insider.

Poor project management is a big issue, the source says. IBM is routinely putting unqualified people into project management positions. “It’s very hard to get promoted at IBM unless you know the right people,” says the source. “People don’t get promotions on merits or skills but on connections.”

For example, at Disney, IBM had “gone through five project managers and enormous staff transition” during its time there.

IBM has laid off more than 1,800 workers in the U.S. and Canada, according to IBM employee watchdog group, [email protected] Lee Conrad, national coordinator, says that IBM seems to be specifically targeting older, or more experienced, higher paid workers and shipping jobs to cheaper labour overseas.

All of this is part of IBM’s stated mission to increase shareholder EPS to $20 by 2015 which IBM calls Roadmap 2015.

Internally, employees are calling the plan “Road Kill 2015.”

Note: This story has been updated. A reader sent us another example of an IBM contract that went bad. Thank you!

Are you a current or former IBM employee with a story to tell? We want to hear from you. We are discreet. [email protected].

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