IBM reins in contract worker hours

IBM reins in contract worker hours

Summary: After weak financial results, the tech company promised that it would reduce expenses. That effort has begun.

TOPICS: IBM, Tech Industry

Multinational tech giant IBM has begun cutting costs after coming up short in its first quarter earnings when it reported them two weeks ago, according to a memo obtained by Bloomberg.

Sarah Frier reports that the company—through U.S. staffing and outsourcing firm CDI Corp.—has ordered some of its U.S. contract workers to bill for no more than 36 hours per week in the second quarter. 

Frier quotes executive Eric Gonzalez in the memo:

You should understand that this action is being taken by IBM to retain as many CDI resources as possible for future work. This action is not a reflection of any dissatisfaction over the services provided by you or CDI but rather an IBM business decision.

After its poor earnings showing—highly unusual for the calculating company, but in line with broader enterprise technology industry trends—IBM promised that it would spend $1 billion to cut jobs and reduce expenses.

"Given our first quarter performance, we now expect to take the bulk of our work force balancing actions for the year in the second quarter," IBM CFO Mark Loughridge said during the earnings call. 

IBM represents one-fifth of CDI's annual revenue.

Topics: IBM, Tech Industry

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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  • Contractors Beware!

    IBM is notorious for this type of dealing with it's contractors. I have worked for IBM and have been a contractor for them, and IBM can "out of the blue" call a two week furlough of the contractors and they just have to deal with it. Thats two weeks without pay and usually very little time to prepare for it. And I have seen them do it more than once within a one year period. The only way to work for IBM with any stability is to be a FTE. I guess it's the nature of the contractor "beast" that these things will occur.