IBM's contractor crackdown continues: Survivors refusing pay cut have hours reduced

Managers told to hit budgets, even if customers bleed

IBM's efforts to crimp the cost of its contract workforce are continuing, The Register has learned.

Big Blue recently stopped hiring new contractors and asked those who remained to take a 10 per cent pay cut. Now it's trying to cut contractors' hours, in three ways.

We were told today that some contractors have been told they must immediately take a two-week furlough - basically leave without pay. IBM often uses this tactic when it's not busy, so while painful to contractors it comes with the gig.

But it's hurting even harder because some of those sent on furlough also took the 10 per cent pay cut. Some IBM contractors, The Register understands, refused the 10 per cent pay cut and were able to stay in their jobs, sometimes because they were deemed too hard to replace and granted an exception. Others who refused the cut were told their contracts would not be renewed, or were threatened with termination.

An IBM staffer who asked to remain anonymous tells The Register that the company has now told senior management that those contractors who refused the pay cut will “be forced to reduce their claimed hours by 15 per cent.”

“This has been communicated to senior IBM management as non-negotiable with no recourse for exclusion, regardless of the business case or impact to clients.”

The Register has also seen a document in which team leaders are offered a new tool for analysing and projecting the number of hours worked by contractors in order to “improve forecast accuracy” and achieve a “Utilization Delta +/- 10%”. Contractors are therefore are being asked to submit their expected working hours two weeks in advance.

An “ad-hoc plan” can be submitted to explain unexpected work or forecasting errors, but The Register understands staff are suspicious of this process because some have recently been challenged about why they worked long hours, despite those incidents being in response to significant outages experienced by clients. We're also told that contractors often feel they must work extra hours to meet urgent client requests.

The cuts are impacting morale: our coverage of IBM's contract capers have generated an inbox full of woe.

“Variations of the following phrase are being mentioned quite often by long-time IBMers regarding the current financial and staffing situation - 'This is the worst I've ever seen it',” wrote one IBMer.

Another told us, “The most recent cut of contractor labor has left me the sole supporter of one business critical system which supports part of the information security for many clients.

“The salt in the wound is 'management' puts us on the hush and tells us to say nothing to the customer or account team as to the cuts. Even if it impacts our delivery of service. We simply have to smile and say, we're doing the best we can. Needless to say morale is at an all time low, and many of us who have been left behind are actively pursuing other opportunities.”

Those opportunities might be filling gaps that IBM can't because it doesn't have the people to do the work.

One Reg reader wrote to say: “In the last seven months I've pretty much worked constantly with five of my former clients, who have hired me directly to do the same work they can no longer find anybody at IBM to do.

“In several cases they had to obtain a quote for services from IBM as a comparison and have had to wait months just to get back a quote that was twice the price and three times the duration, and could not be started for months due to a lack of available staff. In one instance, I was even approached by IBM to do the work my client had asked them to quote for!” ®