IBM Denies That It Will Cut 75% of Workforce by 2017

Updated and corrected 10 May 2010.

There is an interesting little flap brewing in the IT community. Back in March, IBM announced that it would no longer be breaking out information on the number of its US employees, according to this ComputerWorld report. IBM finished 2009 with 399,409 employees, with US employees numbering some 105,000 the same ComputerWorld article noted.

Speculation was that IBM made the move to avoid scrutiny by Congress and others about how many of its US jobs were being shifted overseas.

Then in April, a story appeared in Personnel Today that quoted Tim Ringo, head of IBM Human Capital Management, as saying that IBM could—notice the word could—reduce its workforce to 100,000 by 2017 by firing 300,000 of its workers and then rehiring them as independent contractors using a crowdsourcing strategy.

Under this approach, IBM would hire only to staff specific projects as necessary.

“There would be no buildings costs, no pensions and no healthcare costs, making huge savings,” Mr. Ringo was quoted as saying.

In the article, Mr. Ringo “stressed the firm was only considering the move, and was not about to cut 299,000 jobs, as staff would be re-hired as contractors.”

Well, the article flew under the radar for a few days, but soon rumors spread that IBM was soon going to lay off 75% of its workforce and hire them back as contractors.  The Personnel Today article’s title, “IBM crowd sourcing could see employed workforce shrink by three quarters” probably helped fan the rumor flames a bit.

On Wednesday, according to InformationWeek, IBM denied that it was going to make any mass layoffs, saying that Mr. Ringo “is not part of our HR [human resources] function and has no decision making responsibility within HR.”

InformationWeek also said that, “Ringo provides human resources consulting to IBM's customers.”

IBM denials aside, one wonders whether this was a trial balloon by IBM to gauge the reaction—especially of US politicians—to such an idea.

Update and Correction at IBM’s request:

In my original blog post, I stated that one could reasonably assume that IBM had likely considered crowdsourcing internally, and that IBM was actively suggesting the idea to its clients as part of its consulting practice.

Mr. Doug Shelton, Director, IBM Corporate Media Relations, sent an email today—Monday, the 10th of May—taking issues with these statements, stating that they were “misleading and inaccurate.” Mr. Shelton said that, “Categorically IBM is not considering a ‘crowd sourcing’ plan.”

With that clarification unequivocally on the record, I apologize to IBM for reaching these inaccurate conclusions.

Still, I wonder how soon it will be before the US Congress holds a hearing on IT employee “crowdsourcing” and calls high technology companies—including IBM—as witnesses to see how seriously they are considering implementing the idea. IBM says it isn’t—but have or are others considering it for more than start-up ventures?

The idea is no doubt attractive to some high tech (and other) companies and its time may be at hand.  Who would have thought five years ago that the airlines would start charging for carry-on luggage either?

And as for other witnesses, I would suggest it be the US Department of Education Secretary Arne Duncan. Congress might ask Secretary Duncan to explain exactly how such a move by high-tech companies to fire and then rehire their employees as contractors would encourage more US students to take up computer science and engineering as a profession.

Maybe Risk Factors readers can suggest others that Congress might want to call to testify at such a hearing.

I will be writing more about this issue in the very near future.