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IBM UK mainframe workers train their South African replacements

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Exclusive If you're one of IBM UK's highly skilled mainframe specialists, then you may well be out of a job. IBM has shuffled a huge chunk of its mainframe support operations off to South Africa in a bid to cut costs. As a result, some of IBM's highest profile customers will find their critical mainframe support calls traveling south to a staff who recently spent just over 30 days in the UK learning the ropes.

On May 5, a number of South African technicians arrived at Heathrow airport and made their way to the Warwick Hilton, a source told El Reg. Over the next few weeks, the staffers went through some basic education exercises and gradually moved up to learn about more complex support functions. Specifically, the South Africans were trained to handle IBM's MVS (Multiple Virtual Storage) - aka mainframe operating system - support. The workers were taught by the very people they would soon replace.

"What is happening in South Africa stems from the May 4 announcement by the corporation in which, among a number of things, we announced, 'On a worldwide basis, IBM plans to improve the efficiency of its services operations by consolidating much of the service delivery workload into fewer locations by using standard job roles and tools,'" an IBM spokesman told The Register. "One of those consolidated centers is located in South Africa. It is going to be doing a multitude of things, one of which is running the help desk and support activities for several worldwide customers who use IBM mainframes."

IBM won't reveal the customers affected, but our source sent a shortlist of the initial clients that will likely see their support go to Johannesburg. The list includes the likes of AT&T, ATM, Bradford and Bingley, Equifax, Heinz, Next, Royal Sun Alliance, Scottish Power, Certegy and Diageo.

The May 4 announcement referred to by the IBM spokesman included word that the company planned to axe up to 13,000 workers - most of them in Europe. The cuts followed a shocker of a first quarter in which IBM's results fell well below analysts' expectations. IBM blamed weak mainframe sales in Europe as one factor for the dismal quarter. It's quite clear now how IBM decided to fix the problem.

(IBM's first quarter and layoff actions have resulted in a rash of complaints. UK workers found their severance packages well below packages enjoyed by their peers being pushed out of rival vendors. In addition, the US SEC (Securities and Exchange Commission) has kicked off an informal probe into how IBM handled the Q1 announcement and previous cost forecasts.)

For South Africa, the MVS support shift adds to a growing number of offshoring wins. The country now rivals India for quite a bit of business with many saying the quality of support and staff is higher in South Africa.

"This is an important step for our operations in South Africa because it puts the country right in the middle of IBM's worldwide effort to bring work into what we call Integrated Delivery Centers as we concentrate services support into fewer locations," the IBM spokesman said. "We currently are in the process of hiring several hundred persons to staff the center."

Cape Town has proved a popular destination for many UK companies to create new call centers, allowing them to take advantage of much cheaper but well educated labor. One report suggests South Africa could pull in 100,000 new jobs over the next five years with outsourcing and offshoring trends driving the growth. That number, however, is just a fraction of what India will likely gain. For example, a workers union in the US earlier this month revealed documents showing that IBM could add as many as 14,000 jobs in India this year, while cutting the previously mentioned 13,000 in Europe and the US.

IBM and other giants tend to shrug off the negative press surrounding these types of offshoring moves, saying they must compete on a global scale and take advantage of all opportunities. Offshoring advocates point out that an Indian call center worker is just as entitled to earn a decent wage as a British staffer in a similar post.

The big question, however, revolves around the quality of service foreign workers can provide. The likes of HP and Dell have typically used overseas staffers to handle more basic PC support questions. When the vendors try and move up to servers, customers often react badly, complaining that their business is suffering because of poor service.

IBM's mainframe systems reside in the data centers of the largest companies in the world and often handle key tasks such as order processing, payroll, billing and other crucial transactions.

Our source indicates that many of IBM's high-profile UK customers are not even aware that their support has moved to South Africa.

"Have the customers actually agreed to the proposed actions?" the source asked. "If so, why are IBM going to great lengths to prevent their staff from talking to anyone about it. They have made staff re-sign a confidentiality statement."

The South Africans staff stayed in Warwick from May 5 until June 9. A UK team then flew down to Johannesburg to get the new systems up and running on June 13.

The curious will be glad to know that the new South African support systems went live yesterday - June 30. Is all well? ®

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