While the firing of non-cloud employees raises legal red flags at IBM, what is the future in high tech for the older workforce? by Jon Hansen

Posted on May 12, 2014


“If you’re part of a crew, nobody ever tells you that they’re going to kill you. It doesn’t happen that way. There weren’t any arguments or curses like in the movies. So your murderers come with smiles. They come as your friends, the people who have cared for you all of your life, and they always seem to come at a time when you’re at your weakest and most in need of their help” – Henry Hill, Goodfellas

As I read today’s article in Bloomberg Old and Fired at IBM: Tech Trendsetter Changes the Game, Guards Age Data, I was immediately reminded of a scene from Goodfellas and the resignation in Henry Hill’s voice regarding how one’s career in the Mafia usually ends. Even though getting whacked as they say in the movies is an expected part of the job, it is obviously not something that anyone believes will happen to them . . . until it actually does.

While we now live in a world in which the concept of cradle to grave employment that was at one time the norm is no longer a reality, it is clear that those losing their longtime jobs at IBM share similar feelings to those of Hill. And given that for the first time in a decade IBM’s headcount in 2013 fell, this trend is unlikely to change as the company shifts its attention to data analytics and cloud computing.

I will leave it to you to read the Bloomberg article to determine the legality of how IBM is dealing with their older workforce. However, what is happening at IBM raises an even more interesting and broader question; what is the future in high tech for the older workforce?

Referencing the article’s report that “customers don’t use as many servers on site, damping the demand for hardware and the IBM consultants needed to install and maintain it,” what happens to an industry that is no longer hardware oriented?

If you have ever looked at the profiles of the parent or holding companies for some of the country’s largest conglomerates you will see that there isn’t a lot of head count. Yet these compact entities are where the true power that drives the enterprise resides. In this regard the cloud is not all that different. There are simply not has many people required to make the move to the cloud, let alone to maintain operations once said transition has taken place.

At least this is the opinion of Gartner research director Gregor Petri. In a 2012 Tech Republic article Cloud computing: What does it really mean for IT jobs?, Petri contends that the “Cloud is allowing the industrialisation of IT, that is why to some people it is very scary.” Although he goes on to suggest that this shift is not necessarily going to result in lost jobs for some of the older workforce, Petri’s pin-maker analogy isn’t likely going to hit a reassuring chord with the majority of IT workers.

Of course not everyone is all doom and gloom when it comes to the cloud’s impact on the IT workforce and the workforce in general.

For the past few years IDC has been tracking the economic impact of cloud services. Based on this research they have found that “the shared services offered by cloud computing frees up resources that businesses can invest elsewhere.” This in turn according to IDC leads to the innovation that increases revenue, and thus spurs job creation.

If I understand this correctly, moving to the cloud frees up resources that leads to innovation. This innovation in turn increases revenue that will then spur the creation of jobs? But do the dots really connect in this manner?

I am not so sure that the dots do connect – at least not as seamlessly as the IDC research suggests. If they did, then why has IBM missed earnings targets for the first time in a while, prompting layoffs and the creation of the new and controversial severance package? Are IBM’s difficulties as some contend, due to the absence of a sound cloud-based strategy, or merely a reflection of the new workforce reality of taking to the cloud?

So what is the answer? Is the cloud good or bad for the IT workforce? Will it lead to widespread job loss?