UPDATED 11:56 EST / MARCH 07 2016

NEWS

Report: IBM looking to offshore as much as 80 percent of services biz

The latest round of layoffs at IBM Corp.’s professional services business may be shaping up to be much smaller than it could have been, but the long-term outlook for employees is still bleak. The Register this morning leaked the contents of what is described as a confidential letter in which the company’s management discloses plans for a broad-reaching offshoring initiative to a U.K.-based worker group.

The Employee Consultation Committee, or ECC for short, was reportedly formed last month with the intention of providing a venue for staffers to have their voices heard as the local leadership team works to implement IBM’s restructuring plan. Three weeks after the group’s creation, it was revealed that as many as 1,352 people may soon to be terminated in what would mark the single biggest cut to the company’s U.K. operations since the beginning of the downsizing. Today’s leaked report indicates that the layoffs are part of a division-wide effort to achieve a “Global Resourcing ratio of 68 percent”, a choice of words suggesting other locations will also be affected.

The precise meaning of the excerpt is clarified in another part of the document that reveals Big Blue originally intended to achieve a “ratio of 24/76 by the end of 2016 and 20/80 by the end of 2017.” With the Register claiming that 63 percent of the work that the company’s professional services business handled for U.K clients is already performed in other countries, it’s clear who is set to receive the short of the end stick if and when the goal is finally met.

Although its scope is somewhat unexpected, the existence of the offshoring plan shouldn’t come as much of a surprise: IBM told investors at the end of its last fiscal year that some 70,000 employees left the company in the preceding 12 months as part of its restructuring effort, while almost as many new workers were brought aboard. A portion of the hires can be attributed to the vendor’s aggressive effort to grow high-priority units like the Watson Group. But the fact that Big Blue’s growth businesses only account for a fraction of its total revenues seems to indicate most of the recruits in fact took over existing positions at more traditional units like its professional services arm.

The offshoring effort seems to be corroborated by a recent report from Lee Conrad, the head of an independent union serving the company’s U.S. workforce. He told InformationWeek last week that several of his contacts on the inside tried to take advantage of the 25,000 open positions currently advertised by IBM, but found that many of them are located in popular outsourcing destinations such as China, India and Brazil.

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