IBM to Export Highly Paid Jobs to India, China

Yahoo News ^ | Dec 15, 2003 | William M. Bulkeley and Peter Fritsch

[neverdem]

Mon Dec 15,12:14 AM ET

In one of the largest moves to "offshore" highly paid U.S. software jobs, International Business Machines Corp. (NYSE:IBM - News) has told its managers to plan on moving the work of as many as 4,730 programmers to India, China and elsewhere, Monday's Wall Street Journal reported.

delayed 20 mins - disclaimer Quote Data provided by Reuters

The unannounced plan, outlined in company documents viewed by The Wall Street Journal, would replace thousands of workers at IBM facilities in Southbury, Conn., Poughkeepsie, N.Y., Raleigh, N.C., Dallas, Boulder, Colo., and elsewhere in the U.S.Already, the managers have been told, IBM has hired 500 engineers in India to take on some of the work that will be moved.

IBM calls its plan, first presented internally to some midlevel managers in October, "Global Sourcing." It involves people in its Application Management Services group, a part of IBM's giant global-services operations, which comprise more than half IBM's 315,000 employees.

IBM's plan, still under development, will take place over a number of months in stages. About 947 people are scheduled to be notified during the first half of the coming year that their work will be handled overseas in the future. It isn't yet clear how many of the other 3,700 jobs identified as "potential to move offshore" in the IBM documents will move next year or some time later.

However, the fate of some of the targeted jobs isn't certain: IBM managers still haven't figured out whether all of the work the jobs represent can be performed just as well abroad. The jobs involve updating and improving software for IBM's own business operations.

Some workers are scheduled to be informed of the plan for their jobs by the end of January. After that they will be expected to train an overseas replacement worker in the U.S. for several weeks. The IBM workers marked for replacement have 60 days to find another job inside the company, likely to be a difficult task at a time when IBM is holding down hiring.

IBM declined to comment on what it called "internal presentations."

Wall Street Journal Staff Reporters William M. Bulkeley and Peter Fritsch contributed to this article.

[oceanview]

that's true only with access to capital, these entrepreneurs are out there, but they need access to capital. while its true that a large part of the late 1990s economy was built on lies, the access to venture capital for new business formation was essential, and its missing from today's economy.

[RockyMtnMan]

China still falls into the third-world category, hence my term turd-world (alluding to the lack of indoor plumbing).

Third World Countries

Always today and never tomorrow? Isn't there a number of childhood tales about those who fail to plan ahead?

Protection comes in many forms like controlling immigration, reducing taxes, enforcing trade rules, punishing trade offenders, controlling drunken federal spending, punishing corp corruption, etc. Pretending to care about the "working class" and continuing rampant pork barrel spending is an insult to us all.

[SoulStorms]

but to enact reforms here at home that make it more advantageous to do business in the U.S. than in other foreign nations.

Like what--give every worker a mud hut and pay them in rice and beans?

[RockyMtnMan]

How about a chicken in every pot?

[GOP_1900AD]

In particular C levels at the formerly US companies now becoming PRC companies should be considered active agents of the government of the PRC, and should be relieved of thier US passports and face immediate deportation to the PRC.

[The Old Hoosier]

But don't forget: American access to capital is increased when operational costs are low, thanks to cheap foreign labor.

[Norse]

No, more like remove all the damn red tape.

[psywarrior]

Man are you dumb or uneducated, I flew over china last december, and visited the city of Shangai. It is huge and probably more developed than many american cities.

Also it is not the privelege of only us westerners to be first world citizens. Please travel friend, you have a lot to learn.

[RockyMtnMan]

Look at the pot calling the kettle black. The majority of China lives in poverty. Looks like you bought the ChiCom story hook line and sinker or did you mean to add a sarcasm end tag?

I can often determine the financial health of a country and its inhabitants by flying over it. </dumb>

[Jim Cane]

If the decision to boycott a company based on the extent of its offshoring were done on a rational basis, rather than on the emotional, demagogic basis that is being advocated here, then IBM would hardly be the right target.

It doesn't matter what the decision to boycott is based upon. The customer is always right. Either listen to what the (American) customer(s) wants (or doesn't want) or lose marketshare. Period.

[singsong]

Rather, we will breathe life into foreign economies, giving them the ability to develop themselves so that their salaries and standard of living can increase.

I'm kind of surprised by some of the comments here. OK, These cultures DO NOT increase their standard of living EVER. Look at the Middle East, the beneficiaries of oil money - they expanded their population and POLITCAL apetite. Look at Mexico - since NAFTA, illegal imigration rose a lot. These cultures increase only their population - wich is already huge. The equlibrium for us is ONLY DOWN. BTW, for those who don't know, the money saved does not go to R&D - IBM is building an R&D center in China. The whole thing is not economics - it's a politcal game. It has to do with the inconvenience of having people who are not POOR. That's the ticket - everyone should be equaly poor. The old commie dream. Think about it.

[The Old Hoosier]

These cultures DO NOT increase their standard of living EVER.

First of all they do, only not as much as we have. I don't understand much of your post, but you're making the same assumption the communists do--that the prosperity of one man automatically endangers the prosperity of another. This assumption is wrong. Wealth is not zero-sum.

If you want to see why other countries fail to develop, the real reason is that they have your economic outlook. Look at the recent riots in Bolivia over the attempt to export natural gas. Their economy needs that money and those jobs badly, yet they have this backward mentality and think someone is just out to trick them into giving up their natural resources. It's a lot like the mentality of many posters here.

Another problem in many poor countries is hoarding. People don't invest anything, they hide it in a mattress, because they don't trust any of the institutions. As a result, their capital is so badly misallocated as to be beyond hope.

The other problem is that there is often no rule of law. That's the case in Mexico, where you can't build anything without paying huge bribes to the local officials. They have driven away thousands and thousands of jobs through sheer corruption. There is really no free trade in Mexico, and they suffer because of it. Even so, Mexico's economy is light years ahead of where it once was.

But in the Middle East, the problem is that their economy is totally static. As soon as oil loses its value, as soon as the next big energy breakthrough comes along, those countries are toast, because they have done nothing to diversify. It's like the old Midwestern rust belt where I'm from. They didn't think ahead but instead became dependent on the current day's industry, without planning for the future. Except that for the Arabs, it's even worse. All they have there is their oil, and they aren't prepared to do anything else.

[gcruse]

Slave labor is a wonderfull thing...especially in countries that have well educated slaves

Indians aren't slaves.  They have their lives.  To an Indian, you might appear to be an undereducated, overpaid leech on productive society.  Not to me, you understand, but maybe to an Indian.

[Golden Eagle]

Hoosier - I've just had time to read this but find your posts incredibly optimistic in spite of this announcement.

You almost seem to be saying this is a positive thing, or did you actually say that. I'd like to see you make that case to one of these families who is losing their income to a Chinese engineer this Christmas or next.

We shouldn't shut down our borders, no one is sayig that. But when one of America's traditionally strongest companies like IBM proudly announces it is now more of a multinational conglomerate with more worldwide employees than US ones, while simultaneously slashing 5,ooo more US Jobs and moving them to communist China, we must consider this could already be the end, not just the begining of the end.

You speak of the great depression, but more relevant are our dealings the USSR whereby we starved them out and refused to let our technology fall into their hands. Why are we not doing this with China, but instead are funding the construction of giant computer centers, many of which fall under the direct control of the Chicom Government? This is not how to defeat communistic governments, who can take any profits from any of their businesses and selectively target our industries. Starvation is.

Not only do we have the experiences of dealing with Communist USSR to rely on, we also have experiences of the Arabian dessert to remember. US oil companies invested billions of US dollars to explore and drill the Arabian dessert, including building of infrastructure, all of which was essentially confiscated by the fascist governments which eventually curtailed US exploration and cost our Oil companies advantage over their worldwide competitors.

These are our two best examples of the modern era on how to approach foreign investment in potential advesaries. One advesary we invested in, the other we shunned, look at the results. These are easy lessons to cite, and shouldn't be forgotten in the interests of short term profits. Yes you can't necessarily blame a for-profit company for looking to cut costs, but it is one of the limited roles of government to provide oversight of business and provide the necessary policies to assure their long-term success and the success of the USA. In that regard, the "movement" of jobs from the US to offshore markets should be penalized in some manner, encouraging "growth" into these new markets instead.

[tubavil]

They are higher quality - better components, better manufacturing, and they are engineered. This is reflected in the price as you noted. It's a mercedes vs. Kia thing. Also, my employer offers an employee discount on IBM boxes.

[singsong]

I don't understand much of your post
You should spend more time thinking - as I sugested. I simply stated the facts. You are the one assuming that these societies are going to make the quick giant leap to prosperity - commie style thinking. Fits nicely with the rest of your excuses. The facts are - their population increases much faster than ours, eats up whatever gains they make from trade, strains the resources, the corrupt few rule them as ever and nothing changes except the ammount of aid they request every year.

Look at the recent riots in Bolivia over the attempt to export natural gas.
Of course, they are being endlessly told that the US consumes much more than them, they are being shorted on the deal, etc. It's the same that the Indian and Chinese are going to say very soon - after they feel that the US depends on them. The truth is, the decision to castrate nuclear energy and research was a political one. By design, we are too dependent on Mid East oil (and Bolivia gas). Ditto for job exports.

[The Old Hoosier]

quick giant leap to prosperity

I said no such thing. I don't see how economic development is a communist idea. I also don't see what excuses I'm making. Wealth is not zero-sum, as you imply it is. These other nations can develop economically, if their governments stop hindering them. And in the meantime, all American consumers and businesses benefit from the savings that come from their labor.

[At _War_With_Liberals]

Thx.

[singsong]

Wealth is not zero-sum, as you imply it is.

I didn't imply anything of the sort. I gave you facts - about other industries, other countries. You keep repeating the same old Scheherazade story, 1001 Arabian Nights... Dream on, it's your right.

[lepton]

The main unethical thing being done is demanding that people train others to replace them. Training co-workers is fine. Having to train replacements under durress is just wrong.