My recent series of columns on troubles at IBM brought me many sad stories from customers burned by Big Blue. I could write column after column just on that, but it wouldn’t be any fun so I haven’t. Only now a truly teachable lesson has emerged from a couple of these horror tales and it has to do with U.S. IT labor economics and immigration policy. In short the IT service sector has been shoveling a lot of horse shit about H1B visas.

The story about H1B visas is simple. H1B’s are given for foreign workers to fill U.S. positions that can’t be filled with qualified U.S. citizens or by permanent U.S. residents who hold green cards. H1Bs came into existence because there weren’t enough green cards and now we’re told there aren’t enough H1B’s, either. So there’s a move right now in Washington to increase the H1B limit above the current level of approximately 65,000 because we are told the alternative is IT paralysis without more foreign workers.

Says who?

Who says there will be chaos without more foreign IT workers and are they correct?

Cynics like me point out that foreign workers are paid less and — more importantly — place much less of a total financial burden on employers because they get few, if any, long term benefits. I tend to think the issue isn’t finding good workers it’s finding cheap workers. But the H1B program isn’t supposed to be about saving money, so that argument can’t be used by organizations pushing for higher visa limits. All they can claim is a labor shortage that can only be corrected by issuing more H1Bs.

To test this theory let’s look at Memphis, TN, where IBM has recently lost two big customers. One of them — Hilton Hotels — dumped IBM only this week. The other company is ServiceMaster.

Hilton just announced they are canceling almost all of their contracts with IBM less than two years into a five-year contract. This includes global IT helpdesk, all data centers, and support of “global web” (hilton.com and all related systems).

According to my sources at Hilton, the IBM contract was a nightmare. IBM couldn’t keep Hilton’s Exchange servers running. The SAN in the Raleigh data center hasn’t worked right since it supposedly came up in January, with some SAN outages lasting more than a day. IBM couldn’t monitor Hilton’s servers in the IBM data center. Hilton had to tell IBM when the servers were running low on disk space, for example.

Now IBM is gone, replaced by Dell, and Hilton has a new CIO.

If there’s one point I’d like you to keep in mind about this Hilton story it’s IBM’s apparent inability to monitor the Hilton servers. More about that below.

ServiceMaster is the other former IBM customer I know about in Memphis. Among its many beefs with IBM, ServiceMaster also had a server monitoring issue. In this case it was the company’s main database that was going unmonitored. IBM was supposed to be monitoring the servers, they were paid for monitoring the servers, but in fact IBM didn’t really monitor anything and instead relied on help desk trouble tickets to tell it when there was a problem. If you think about it this is exactly the way IBM was handling server problems at Hilton, too.

Now to the part about labor economics.

When ServiceMaster announced its decision to cancel its contract with IBM and to in-source a new IT team, the company had to find 200 solid IT people immediately. Memphis is a small community and there can’t be that many skilled IT workers there, right? ServiceMaster held a job fair one Saturday and over 1000 people attended. They talked to them all, invited the best back for second interviews, and two weeks later ServiceMaster had a new IT department. The company is reportedly happy with the new department whose workers are probably more skilled and more experienced than the IBMers they are replacing.

Where, again, is that IT labor shortage? Apparently not in Memphis.

About that database monitoring problem, ServiceMaster hired DBADirect to provide their database support from that high tech hotbed, Florence, KY. The first thing DBADirect did was to install monitoring tools. Remember IBM didn’t have any monitoring running on the ServiceMaster database.

How can a company 1/100,000th the size of IBM afford to have monitoring? Well, it seems DBADirect has its own monitoring tools and they are included as part of their service. It allows them to do a consistently good job with less labor. DBADirect does not need to use the cheapest offshore labor to be competitive. They’ve done what manufacturing companies have been doing for 100+ years — automating!

Even today IBM is still in its billable hours mindset. The more bodies it takes to do a job the better. It views monitoring and automation tools as being a value added, extra cost option. It has not occurred to them you could create a better, more profitable service with more tools and fewer people. When you have good tools, the cost of the labor becomes less important.

Which brings us back to the H1B visa issue. Is there an IT labor shortage in the USA that can only be solved with more H1B visas? Not in Memphis and probably not anywhere else, either.

There’s certainly a shortage of imagination, absolutely a shortage of integrity, and neither shortage is saving anyone money.