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IBM outsourcing to cause fewer layoffs
Report says IBM making new effort to find work in company for 5,000 whose jobs are shifted overseas.
July 29, 2004: 7:48 AM EDT

NEW YORK (CNN/Money) - IBM is moving to reduce the number of U.S. workers it lays off due to the transfer of their work overseas, according to a published report.

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The Wall Street Journal, citing internal documents from the computer maker and comments from its executives, reported Thursday that IBM is taking more extensive steps to find jobs within the company for those whose work is being shifted to lower-wage countries. IBM became a target of rising criticism about outsourcing of jobs overseas when it was revealed earlier this year it planned to send 5,000 U.S. jobs to India, Brazil and other developing nations.

While IBM does not say it intends to offshore fewer jobs, the paper reported it now expects to layoff only 2,000 people out of the 5,000 whose jobs are being sent overseas. Earlier estimates were that 3,000 would be laid off due to the outsourcing.

Finding new positions for affected employees is made easier because IBM is expected to add overall U.S. and worldwide employment this year. The company said earlier this year it expects to add 15,000 jobs to bring worldwide employment to 330,000 by the end of the year, including a net U.S. employment boost of up to 2,000. The paper said IBM would not say how this new internal-job placement effort would affect those numbers.

IBM's steps include paying for retraining and giving employees more notice, up to 60 to 90 days, that their job might be shifted overseas, to give them more time to find a new position within the company. It also has established a policy that managers cannot hire from the outside if an IBM worker whose job has been moved can fill the open position.

The paper said IBM also is developing software to automate the process of matching employees' skills to job openings. It said it expects to save 20 to 30 percent of the cost of filling positions by shifting an existing IBM employee rather than hiring an outsider.

IBM employees offered new positions may end up in lower-paid positions than the ones they are losing. And workers are expected to take a comparable job if it is offered, the paper said.

IBM defines a comparable job as one that may be work at a lower employment classification, with up to a 10 percent pay cut and a shift or schedule change. Those who refuse a comparable job offer lose the right to severance, generally equal to two weeks of pay for every year of employment.  Top of page




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