That is what happens during the early stage of a recovery,companies like IBM get way stronger because they are the ones driving the productivity gains and innovation.Unfortunately for the worker it takes fewer of them to do the same job so the UE rate keeps climbing.Then what happens is other companies realize they are behind the 8 ball and they have to make drastic improvements in their bottom line so they start laying off people and trying to build/ aquire new technology just so they can catch up to the companies like IBM who always seem to be able to innovate.I believe it is known as a Paradiegm Shift in the market place unfortunately it always causes more layoffs.I for one though am a believer in IBM they always seem to be ahead of the curve and yes I know some may say it is pie in the sky stuff but IBM is best of breed.Well ,enough of my ad-lib here have a nice day.
True, on the point. Loss of quality takes time for public perception (Toyota) or business perception. Moving everything he can to India may be cheap and inexpensive short term but long term ... and long term investors should listen here ... the sandcastle of IBM is being washed away under the base.
Eventually clients see that their costs do not equal quality of service delivery. See American LeFrance for a prime example and, if memory serves, old Circuit City was to have an IBM Point of Sale and inventory system installed. Look where both these companies are these days. Trashed.
You can go cheap only so long and so far. Then you are no longer cutting staff FAT but genuine muscle and nerves of the company and therein cutting into service delivery for clients. They take a while to learn but eventually promises made are not kept. And contracts are cut, with loss of revenue. Not all at once, but over time it happens.
Just look at a competitor, SAIC running CITYTIME for the city of New York for a classic disaster.
Just look at Lockheed which has the security camera system contract for the MTA in Manhattan, another project from hell gone bad.
Delta pulled their India operations back to the United States because of poor quality and service delivery. American Express did the same.
Sam is cutting costs and that is all he knows how to do. Gerstner was a builder, not a destroyer (as he told Henry Kravis of KKR when he was given RJR Nabisco).
Well, but at the same time IBM executives forget to tell them that they will need the particular expertise in Asia but not in USA. Do you know how many senior expert technologists with Phds, and MS in high tech areas are laid off by IBM since last 15 years from the IBM USA products development centers?
IBM executives, seating on totem pole do not always have better visibility. Most of the time their heads are buried into their day to day problems and politics than long term impacts. Remember, the majority executives are rewarded for their short term performance.
Actually the current US economic structure is configured in a such way that even any stimulus spending help top capitalist corporations more than the 95% common American tax payers. The stimulus spending have created more jobs in China than in USA. May be that was the capitalists' well organized plan to boost communist political strength and agenda!!!!