IBM layoff numbers

For a more anecdotal view of the unemployment numbers, it's interesting to look at the recent story on IBM. The tone of the article focuses on the "bad economy, everyone's firing" meme without really digging into the details. It's pretty clear that IBM is using the current economy to shift a significant chunk of its global business services unit (everything from management consulting to IT support) to India - a labor arb play that would never fly in more normal times.

The hullabaloo over outsourcing is completely drowned out these days (and rightly so) by discussions on the economy and there surely are many other firms who are using this as an opportunity to shift operations overseas.

To be sure, a significant chunk of the lay-offs are attributable to lower demand for services but there is also a significant chunk using the poor economy as a smokescreen. A big reason that Lou Gerstner reorged IBM in the late 90s from a hardware provider to a service provider was to avoid the cyclicality of hardware sales.

The bottom line is when the economy recovers, don't expect many of these jobs to come back.