Exclusive Just 20 per cent of IBM’s Global Technology Services workforce in mature economies could remain under offshoring and near-shoring plans set out by the company’s top brass, The Register can exclusively reveal.
Big Blue last month embarked on a cost-cutting exercise in the UK, putting 1,352 staff on a 45-day notice period to “drive an aggressive agenda to transform its operational model to maintain our competitive advantage”.
Staff "at risk" work in IS Delivery, Client Management and Client Excellence, and formed an Employee Consultation Committee (ECC) with IBM management to discuss the details. 185 jobs are expected to be cut by mid-April.
In a confidential document drawn up by IBM and the ECC, Big Blue said 63 per cent of UK work is completed by employees in offshore locations. The IT giant said it was “targeting Skills For Value initiatives to achieve Global Resourcing ratio of 68 per cent by the end of 2016”.
“This is well short of the Global Blueprint ratio of 24/76 by the end of 2016 and 20/80 by the end of 2017,” the document stated.
This is “complicated” by the account mix, and “any specific contract restrictions related to local legal, security and/ or compliance requirements,” it added.
In other words, individual operations might not adhere to the blueprint but it is there to guide management teams worldwide. “The local IMT [IBM management team] has discretion as to the composition of the job assignment within that percentage parameter based upon the local market and contractual obligations,” the document stated.
For the past 15 quarters, IBM has failed to grow its top line with the obvious impact felt on the bottom line. In calendar Q4, GTS revenues fell 9.7 per cent to $35.4bn and gross margin dropped to 37.4 per cent, though IBM said this was more related to investments in bit barns and new contracts.
The company isn’t alone in overhauling its services divisions; as we exclusively revealed on 4 March, Hewlett Packard Enterprise has put 1,000 UK staff in its Enterprise Services wing at risk of redundancy as it consolidates service delivery centres and sends some work offshore.
In the world of dev-ops, more work is being brought in-house because it is hard to be agile when most of the coders are based in another time zone.
El Reg wonders the wider tech services space will come full circle. ®