IBM Managers Discussed Ways to Thin Older Ranks, Documents Say

(Bloomberg) -- International Business Machines Corp. managers discussed ways to make the company's workforce younger and move jobs overseas, according to a presentation filed in court recently.

The documents are at a center of a lawsuit against IBM by a former executive who says he was fired based on his age. A person familiar with the filings said IBM couldn't verify whether the documents were real.

The presentation filed in December outlines a proposal to “correct seniority mix.” It also purports to detail how IBM could “lift and shift” jobs from its main markets in developed countries to places such as Costa Rica and India. The former employee asked the court to compel IBM to produce the remaining portions of the documents.

“IBM has never said that the requested, damning documents do not exist; it just refuses to produce them in an attempt to hide the man behind the curtain,” the former employee argues in a motion filed Jan. 4.

IBM has been quietly firing people for years, Bloomberg has reported, even as Chief Executive Officer Ginni Rometty publicly vowed to hire about 25,000 workers in the U.S. Her hiring pledge, made in late 2016 on the eve of a summit between technology executives and then President-elect Donald Trump, sparked outrage among current and former IBM workers, who vented on message boards and Facebook groups.

ProPublica last year published a wide-ranging story, based on similar documents, that argued IBM broke U.S. employment laws in its treatment of older workers. Bloomberg retrieved the filings from the court's website before they were sealed at IBM's request.

IBM said the lawsuit “misses the point” since colleagues who were older than the employee were retained on the team. “That's because IBM makes its employment decisions based on skills and business conditions -- not age,” said Ed Barbini, an IBM spokesman. “In fact, since 2010 there is no difference in the age of our U.S. workforce, but the skills profile of our employees has changed dramatically due to our heavy investments in skills and retraining.”

IBM's workforce shrunk by 54,000 from the end of 2012 through the end of 2017 as the company let go of people in the U.S., Canada and other high-wage jurisdictions in an effort to cut costs after missing out on the early stages of the cloud-computing and mobile-technology revolutions. Companies like Alphabet Inc.'s Google, and Microsoft Corp. have swept ahead in size, revenue and prestige, and Big Blue has struggled to catch up.

Many industries and companies in tech and beyond have been sending jobs overseas to take advantage of lower wages and to be closer to local markets. New York-based IBM now is reported to have more employees in India than in the U.S.

The wave of layoffs has created a legion of disaffected workers who say they were targeted for their age and the higher salaries that come with decades of tenure. ProPublica estimated that in the past five years alone, IBM eliminated more than 20,000 U.S. workers over the age of 40, about 60 percent of its estimated total U.S. job cuts during those years.

Since 2010, the company hasn't disclosed how many of its employees are based in the country, but at the end of 2017 IBM reported a total of 380,300 employees globally.

It's unclear who was involved in the creation of the document and whether it reflects initiatives implemented by IBM. Still, if authentic, the plans, which date from 2016 and are outlined in the eight-page filing, fit with accounts of former employees interviewed over the past year, as well as reporting that shows IBM has shifted thousands of jobs from the U.S. to cheaper labor markets. The title on one page says it was produced by the company's “Digital Business Group,” a unit responsible for integrating digital technology throughout the company.

One slide, titled Hybrid Cloud - Talent Fall Plan Overview, details a strategy to “displace” jobs in major markets and hire in Costa Rica, India, Poland and Romania in a bid to increase “labor productivity.” Another slide titled “Early Professional Hiring” proposes a plan to “shift headcount mix towards greater % of early professional hires.” It's illegal in the U.S. to discriminate based on age when it comes to hiring people over the age of 40.

IBM's alleged efforts to make its workforce younger have already come under fire. The Equal Employment Opportunity Commission has consolidated complaints against IBM into a single, targeted investigation, according to a person familiar with it. And lawsuits are cropping up against the company, including a class-action suit filed by a lawyer who's taken on Uber Technologies Inc., Google and Amazon.com Inc. on behalf of their workers before.

To contact the reporter on this story: Gerrit De Vynck in New York at gdevynck@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Molly Schuetz, Andrew Pollack

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