Tuesday, April 27, 2010

Are you ready to get crowd sourced?

Uh oh, here comes the next great consulting trend to crush the soul of the American worker - crowd sourcing. According to Personnel Today, IBM thinks that they could cut their payroll from about 400k to 100k employees by 2017 via crowd sourcing.

"Tim Ringo, head of IBM Human Capital Management, the consultancy arm of the IT conglomerate, said the firm would re-hire the workers as contractors for specific projects as and when necessary, a concept dubbed 'crowd sourcing'.

"There would be no buildings costs, no pensions and no healthcare costs, making huge savings," he said.

Outsourcing experts said employers from both the private and public sector were increasingly using the model as they looked to squeeze people costs post-recession."

In my opinion, this is one of those ideas that looks great on paper - like Time Warner buying AOL - because of the cost savings, but the long-term impact on your business can be awful. Consider this simplified example: McDonald's hires a guy to flip burgers or microwave them or dip them in a vat of Uranium 232 however they cook those things. It's not complicated, but he's good at flipping burgers. Well, in order to save costs McDonald's decides to outsource this function to the crowd. The low-bidder wins the contract to flip the burgers today. McDonald's has lowered their cost but they start delivering an inconsistent product because one day they have the world's best burger flipper and the next they have Peter Griffin - and yes I know that's a photoshopped picture but it doesn't make it any less funny :)

Pretty soon you start to question whether or not you should go to McDonald's for a burger because you are not sure if you're getting a great burger or a PeterBurger.

Now imagine this is a giant software implementation worth $1 billion. Do you feel comfortable gambling that IBM will assemble the right team for you implementation? I wouldn't. Hopefully, this is just a trial balloon being floated to gauge the market's response and saner minds will prevail at IBM.

If this does catch on though look for more US jobs to require more work, for less pay and fewer benefits. Yummy, it's gruel for breakfast, lunch and dinner!

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Crazy news of the day:

This story is a couple of months old, but I just came across it today.... 74 yr old Canadian busted on 30 year old pot charge.

"A 74-year-old woman from Hamilton, Ont., who attempted to cross the border into New York state earlier this week learned the hard way that the United States does not take kindly to drug charges — no matter how old.

"She said she wanted a waiver to enter the U.S., which is not uncommon," said CBP spokesman Kevin Corsaro.

A routine criminal record check revealed that Cole was the subject of active felony warrant issued on April 1, 1980 by the New York City Police Department.

Cole was arrested on the outstanding warrant and was extradited to New York City, where the senior citizen will face the charge of possession with the intent to distribute marijuana."

Well, I know I'll sleep better tonight knowing that Grandma is off the streets.

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Just a quick note on Ford. Clearly, they are the best positioned of the US carmakers and they - along with GM, Toyota, Hyundai/Kia - are drinking Chrysler's milkshake. However, despite Ford's most recent profit note that almost half of the profit came from their financing arm (a volatile business) and while generating a profit their debt continues to grow. Any uptick in interest rates or downturn in business will make that debt load seem unbearable.

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Cheers!

1 comment:

Anonymous said...

"Crowd sourcing" reminds me of the banking industry. The teller is the lowest paid, entry-level position with one of the most important jobs (handling the customer's cash accurately, balancing every night, being a sales person) but also, in most banks, with the highest turn-over. Although customers don't physically go into the bank as often as in the "old days", they still like to see a familiar face and be greeted as a person, not as a number on your check or deposit slip. Same concept as flipping burgers. This is precisely why I closed my accounts at one particular bank (not they miss me!) Different teller every time I went in.