IBM Freezes Salaries in Global Technology Services

IBM’s informed its Global Technology Services employees that many of them will be hit with a salary freeze this year.

An internal email lays out how the across-the-board good times are about to come to a halt:

To balance our ability to remain competitive with the need to invest in people who have high-demand skills, there will not be a broad-based salary program in GTS in 2012. Instead, we will target the 2012 investment to skill groups or focus areas as identified by each GTS line of business, based on local market needs. These decisions do not affect the significant investments IBM makes each year in talent in addition to salary, including bonus programs, recognition, promotions, and skill development.

Translation: Some employees in the most high-demand areas will get raises, but most of them — and all executives — won’t.

This strategy plays into a 2015 road map articulated by CEO Virgina Rometty, who laid out an aggressive growth strategy and plans for a sharp increase in earnings. One employee told Computerworld that rather than doing smart product development and growing market share, the company is “maniacally focused on cutting labor costs and off-shoring work to low-cost countries.”

In fact, as we’ve reported before, IBM has hatched a plan to ease thousands of workers out the door without having to lay them off by allowing them to reduce their hours by almost half while retaining 70 percent of their pay. In exchange, the employees must pledge to retire by the end of 2013.

It’s clear that the company has been cutting its U.S. workforce in recent months while increasing its worldwide head count. What’s unclear is whether that will ultimately help its competitiveness and bottom line.

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19 Responses to “IBM Freezes Salaries in Global Technology Services”

  1. Steve

    Oh my God, what will those poor and long suffering IBM-ers do? I’ve been unemployed for a long time myself and have NO income but never mind that. IBM employees are ENTITLED to regular raises and this announcement signifies the true END OF TIMES.

    • Greg Macdonald

      We’re simply not ENTITLED to raises. There is a rating system that is directly related to our contributions over the year. If your rating is low you do NOT get a raise. The 5% increase I’ve had over a 7 year period (top contributor by the way) doesnt even keep up with inflation. Gather your facts before posting your comments.

  2. IBM’s only strategy for a while now has been labor arbitrage. Acquire company X, fire as many of their developers as possible, and offshore to IBM software centers around the world. This may work in the short run, but there ‘s no such thing as free lunch.

  3. User1

    A good friend(Indian) of mine just came back from India and he said that IBM is hiring like crazy in India. Looks like the article is correct… IBM is trying to get rid of their U.S based employees and replace them with cheaper overseas labor. God, I’m glad I’ll be out of I.T within five years !!!

    • Steve

      You and me both. When I got my CS degree in 1986 I had 3 offers on the table at once, and that’s with no experience. Now I can’t even get an interview.

  4. Steve

    Don, I’m unemployed. I would love to have income of any kind at all. If IBM offered me a job contingent on having a salary that would DECREASE 5% every year I worked there, IT WOULD BE THE BEST THING TO EVER HAPPEN TO ME! Why is this story of the salary freeze newsworthy? I mean, what’s your point? Am I supposed to care what people at IBM make? You mean, IBM pays people to work there? I thought people “worked” simply as a natural expression of their creativity, no? If a worker had some rare skill, it might make sense to give him a raise or bonus but why in the world would a company give anyone a raise just because another calendar year ticks by? I just don’t get that. Tell me how I can sign up for that JOBS PROGRAM!

    • Hi Steve –

      Thanks for your note. I think the story’s newsworthy because it gives people a sense of what’s going on in the industry. IBM’s a big player, obviously. The “point” of the story is simply that it’s happened. For various reasons, a lot of our users like to keep abreast of this kind of thing, which is why we write about them.



      • Steve

        I beg to differ. This type of news is relevant to people who work for IBM, not the general public, for which it constitutes “information overload”. Gotta filter this stuff out.

  5. Charles

    My first observation is that Steve appears bitter. This is completely understandable. I was recently hired after a six month stint of unemployment. To me the bigger picture here and why I think the article is important is that it clearly indicates that companies in America are still shipping jobs overseas with complete wanton disregard of what is better for our country.

    Executives negotiate huge ridiculous salaries, bonuses, outrageous perks for themselves and they have proven that they intend to protect their income at the expense of American workers. When is the government going to stop this madness is what I’d like to know. Oh that’s right, they’re protecting their own personal interests at the American workers expense also.

  6. 2012 Casualty

    My position was moved this year to Brazil.

    Take a look at how many US employees IBM now has…. Oh wait, IBM doesn’t provide that information anymore. Why, because it is disgraceful for a “US” corporation to have less than 25% of their workforce employed in the US. By 2015 roadmap it may be even closer to 10%.

    The customer sure does not benefit from this. They receive a lesser quality of service for a higher price. If you don’t believe me, ask the customers.

  7. bigmike2238

    After reading what everyone has posted here, I’m sure the apocalypse is at hand! I use the term loosely. I don’t think it’s right that companies are shipping their positions overseas, but in the same token if Americans were willing to work for less…what would be the point? I’m not saying people should be willing to work for next to nothing, but if you apply for a job and put a starting salary of $50,000 and someone overseas is willing to work for half of that. Who do you think a company, whose main purpose is to produce high yields, will seek out and hire? Sure the US economy at present plays a part in this too, but you can’t overlook the greed of candidates who feel they should be driving a Porsche just because they received a degree and a couple of certs.

    The problem is more people tend to have the attitude “this is above my pay grade.” If more people had Steve’s attitude there would be no point in shipping jobs overseas because employers could afford to keep them here.


    • bigmike2238

      After Doing a little bit of research, I realize now that companies are making huge profits by hiring people overseas due to the vast difference in what’s considered a good wage in the respective country.

      I still think employees should be happy with the average middle class salary which is around 35-40K, and be willing to work and “climb the ladder” for higher wages. From what I’ve read, a lot of employers are not doing well due to the economy. New Job creation numbers only confirm this.

      I think IN SOME CASES…the anger of not being able to find work is misdirected at corporations. The reality is, if we were still in a surplus and the American people could spend like they did back in the 90’s, the jobs would be there.

      The only thing you can really do is wait, vote and hope for things to get better.

  8. RealityCheckPlease

    “No CIO ever got fired for using IBM”. It’s an old saying, but probably still true today. So IBM can afford to use third world employees until their reputation starts to deteriorate.

    • Agent K

      That will stop being true very shortly. CIO’s are starting to recognize that they aren’t getting the level of quality that matches the premium prices that IBM is charging. They could start by cutting out the seven layers of middle management in IBM who have no idea what IBM’s products actually do and have no contact with customers.