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A Team of IBM’s Indian engineers smile for a photo

It’s a story as old as time. IBM skated on its reputation for decades as the best and brightest tech company. But then they started firing all their best engineers and replacing them with Indians with fake degrees who could barely calculate 2+2.

It worked for a short time. they would send in their Analyst team of Americans, and get a big overpriced bid through on the contract. Once they had the contract, the Americans disappeared and the Indians arrived, picking their noses and stinking of curry. They looked bewildered and confused. One engineer never turned on his computer at all, preferring to chat on his iPhone all day.

And IBM pocketed 100s of billions of dollars that should have paid the higher cost American engineers who had real degrees and training. By throwing them into the streets they had increased their profit margins. For a time.

But then projects began to fail. BIG projects. Like the Pennsylvania welfare computer modernization project. “The IBM name used to be the gold standard, but now that they substitute in these Indian engineers, it’s more like the crap standard” said Teaisha Mays.

According to the complaint: IBM sent a team of business analysts to start the project in 2006. In 2008, with their design complete but not yet implemented, the firm pulled them out, creating “a knowledge gap” just as it was time to write software code and design applications.

Soon after, IBM’s “day-to-day leads on the project” were moved out. (One, Robert Donaldson, in 2011 became IT chief for the Pennsylvania Department of Revenue.) Untested code piled up. IBM blew past deadlines, then “tried to obscure and whitewash these facts with misleading, deliberately confusing reports.”

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Software Engineer Digesh isn’t ashamed of using a fake degree

“So what if we have purchased our diploma paper, we are too poor to afford college” said Digesh, a senior engineer, “It saved me time and money and now I’m a top engineer leading projects. I have 11 children to feed!”

 

In 2013, with the IBM project  “45 months behind schedule and $60 million over budget,” the state hired Carnegie Mellon’s Software Engineering Institute to audit the project. The school found “an abnormally high rate of defects” in IBM’s incomplete code. Carnegie Mellon recommended against finishing the program “because of the high risk of failure.” The state canceled the IBM project and went back to its aged legacy systems.

 

Pennsylvania isn’t the only state that says IBM ripped it off. In 2010, Indiana sued IBM after canceling a state welfare-processing contract. IBM sued back. A lower court told the state to pay IBM $52 million in 2012. Two years later an appeals court reversed that ruling and said IBM owed Indiana at least $50 million. That case is still in court.

To avoid future software meltdowns, state officials led by Sharon Minnich, the Deloitte Consulting and SAP veteran who heads Pennsylvania’s Office of Administration under Gov. Wolf’, say they have taken steps to standardize and partly centralize state software procurement and review contracts with additional oversight.

They have also hired a new unemployment-compensation benefits-modernization contractor, Florida-based Geographic Solutions Inc.,a 170-person, 25-year-old private firm with other state clients. Geographic has agreed to update that system for $35 million, a fraction of what IBM charged. Additional project managers could add up to $10 million.

 

This time, the contractor expects to buy solutions already used by dozens of other states off the rack, instead of building new ones. Whether you credit the state’s improved management, or the software industry’s evolution toward off-the-shelf (or downloaded) commodity products in the 12 years since the IBM deal was signed, it looks as if taxpayers may finally be in for an IT dividend.