International Isn't Just IBM's First Name

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Big Blue, with 375,000 employees worldwide, used to focus on developed markets. Now it’s hiring fast in emerging countries, where many of the new employees perform services for global clients. Here’s a sampling of its staffing levels. Alberto Mena/BW

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The result: Growth in services revenue slowed, and margins flattened out. IBM responded in 2005 by slashing more than 15,000 jobs in high-cost Western Europe, U.S., and Japan.

Cost-cutting alone wouldn't do the job: Palmisano had to transform how service work was done. He assigned Robert W. Moffat Jr., 51, a longtime IBMer, to the task. Moffat had already wrung $5 billion of annual costs out of IBM's manufacturing supply chain. For decades, IBM factories had focused primarily on one product and one geographic market. But by 2005 they made any number of products for a wide range of locales, so IBM was able to operate fewer plants and keep them running at higher capacity.

Moffat figured that the same approach could be taken with services. His team surveyed countries for costs, available talent, educational pipelines, languages spoken, proximity to markets, and political stability. They used this information to choose locations where IBM would serve clients anywhere around the world. Moffat set up finance and administration back-office centers, for example, in Bangalore, Buenos Aires, Krakow, Shanghai, and Tulsa.

Some longtime IBMers have found it difficult to accept the changes. When a bank in Spain asked IBM to provide financial services from two different delivery centers in order to reduce the risks of a major disruption, the first thought of IBM's Spanish staff was to set up a second facility within their country. Another executive pointed out that IBM's office in lower-cost Argentina could handle the bank's tasks. "Some people still think of themselves as being in separate companies," says Moffat.

Moffat and his colleagues also have used their manufacturing experience to keep track of IBM's far-flung employees. Just as every component used in an IBM computer is described in detail on inventory and planning documents, new databases contain profiles of employees that list their capabilities and their up-to-the-minute availability. Yet while a computer part doesn't change over time, people do. So the databases can be continuously updated by employees and their managers as employees gain skills and experience.

Before, project managers assembled teams largely made up of people they had worked with. But as IBM expanded around the globe, managers found it harder to pull teams together. Now project managers post detailed requests in one of the databases called Professional Marketplace that lists more than 170,000 employees along with their skills, pay rate, and availability. Other managers monitor the database and serve as matchmakers between jobs and people. The databases have shaved 20% from the average time it takes to assemble a team and have saved IBM $500 million overall.

CROSS-BORDER HIRING

By sifting through several personnel databases with sophisticated software, IBM's top managers can quantify the skills they have on hand worldwide and compare them with projections of what people they'll need in six to nine months. When they spot a coming shortfall, managers coordinate with colleagues in other countries to recruit or train people. In one case, IBM managers in Phoenix wanted to build a team in Brazil to test software for a large U.S. corporate client. After they put a request on Professional Marketplace, a manager in Brazil assembled a team in a week. Now IBM has 30 software testers working in Brazil.

IBM Brazil is a true microcosm of the enterprise. In five years the workforce has grown from 4,000 to 13,000 people, many of them based in Hortolandia, Brazil's Silicon Valley, about a 90-minute drive from São Paulo. Employees fly the national flags of their clients on their cubicles. Walk down the aisles and you'll hear English, French, Portuguese, and Spanish spoken. Salaries are about half of what IBM pays in the U.S. for similar work.

While most of the management team in Brazil is local, IBM mixes in people from other countries to hasten the global integration process. One such "assignee" is American Robert Payne, a 22-year IBM executive who runs part of the tech services organization in Brazil.