Ibm Crowd Sourcing

IBM crowd sourcing could see employed workforce shrink by three quarters

Louisa Peacock 23 April 2010 16:53

Multinational firms saddled with huge people costs are considering downsizing their permanent workforce and hiring sub-contractors on a scale never seen before - presenting an "enormous" management task for HR.

IT giant IBM told Personnel Today that the firm's global workforce of 399,000 permanent employees could reduce to 100,000 by 2017, the date by which the firm is due to complete its HR transformation programme.

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'.

What is crowd sourcing?

Crowd sourcing is the act of taking a job traditionally performed by an employee and outsoucring it to an undefined group of people on a project-by-project basis, in the form of an open call.

Firms wishing to follow this model could encourage employees to set up a company with 10 or more colleagues, and buy back their services as and when needed.

Source: Burnt Oak

"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.

When asked how many permanent people IBM could potentially employ in 2017, Ringo said: "100,000 people. I think crowd sourcing is really important, where you would have a core set of employees but the vast majority are sub-contracted out."

He stressed the firm was only considering the move, and was not about to cut 299,000 jobs, as staff would be re-hired as contractors.

High-profile employers in the oil, manufacturing, IT and services industries are considering downsizing their permanent employee base and instead using contractors, according to outsourcing experts.

Robert Morgan, director at Burnt Oak consultancy, said the trend stemmed from American-owned companies trying to improve the ratio of how much money per employee per quarter they can make.

"If you can dump your staff that improves your ratio, and then the analysts tell investors to buy stocks in the shares," he said.

"The UK service industry is competing against low-cost countries such as China. It also competing with new forms of technology, so the last thing organisations want