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.

[Golden Eagle]

all American consumers and businesses benefit from the savings that come from their labor

You're still ignoring those 5,ooo American engineers that will soon be put out of work by one company alone. It may not be a zero sum game, but this is as clear cut of a 1 for 1 job loss as there is.

Is this good for IBM? Maybe, but don't forget they're happy to tell us they're not even a US-majority company anymore, so why wouldn't it be. These companies need to be kept in check, and past incidents with Loral et al not so quickly forgotten either.

Don't ever forget, if this was all up to the Chinese, in the end we would all be out of work and they would have all the technology. This announcement by IBM could easily be read by them as steps in that direction.

[lepton]

Why would any company want to add high-paying jobs of any kind here if they can get the work done by low-paid people overseas?

Relative value of work, and costs associated with the work being done.

[The Old Hoosier]

You're still ignoring those 5,ooo American engineers that will soon be put out of work by one company alone. It may not be a zero sum game, but this is as clear cut of a 1 for 1 job loss as there is.

Temporarily, yes. But if you're worried about that, take a look at adam_az's post at I think #14 above. These guys will get nice severance packages, and some of them will be hired in other parts of IBM. Also, programmers are by trade very versatile and can take all kinds of different jobs. They can also start their own businesses more easily than just about any other kind of professional, except maybe a lawyer.

In the end, this act by IBM will free up American capital and result in more investment and job creation here--money that small businesses and consumers would have had to pay for PC's. If not for similar acts by thousands of other companies, everything we buy would cost three to five times as much, and much of the technology we have would never have been developed for lack of capital and resources.

Let's keep things in perspective here: this is not the cold war. This is some internal programming jobs at IBM--not nuclear secrets (which the Soviets did get, by the way). None of this falls under the forbidden export categories. They have PC's in China already.

There is no point in trying to "protect" jobs that can't be sustained here in a competitive environment. Such "protection" always comes at the cost of even more jobs and growth that won't happen.

[The Old Hoosier]

Yes, you did imply that wealth is zero-sum. In fact, you said it when you said the "equilibrium is only down for us," one of the few parts of your post that made any sense. That is the Marxist assumption that underlies your protectionist thinking. Well, it hurts our economy to make such assumptions. We create wealth here through continued development, and the rising tide lifts all boats in the end.

[The Electrician]

No argument from me on that...

[singsong]

Yes, you did imply that wealth is zero-sum. In fact, you said it when you said the "equilibrium is only down for us," one of the few parts of your post that made any sense.

In that same sentence I imlied that wealth is NOT a zero-sum game. Wealth is spent on something. For some cultures it increases the quality of life and personal independence. For others it increases population and political ambitions. When the first is sold out for the second, well, we all go down... You have to work on that comprehension ability of yours.

[Golden Eagle]

These guys will get nice severance packages, and some of them will be hired in other parts of IBM.

You have no way of knowing that. What we do know is this comes right on the heels of 2 recent rounds of layoffs for IBM, so relocation within the company is probably extremely low, unless you want to move to Bejein.

In the end, this act by IBM will free up American capital and result in more investment and job creation here--money that small businesses and consumers would have had to pay for PC's.

IBM is the 'premium' pc company, so no one will really be saving any money buying pc's from IBM, ever.

Let's keep things in perspective here: this is not the cold war. This is some internal programming jobs at IBM--not nuclear secrets (which the Soviets did get, by the way). None of this falls under the forbidden export categories.

Let's keep our eye on the ball, how about instead (article from minutes ago):

Sun fined for Illegal Exports

This kind of stuff is going on all the time, and needs to be better controlled instead of this shortsided selling out we keep seeing.

[Cronos]

Moving to India, an area that is a hot bed for terrorists

It's a big country with the trouble spots in the north. Kind of like after the attacks on the WTC stopping work going to Nevada as it's in the same country that had terrorist attacks. Sheesh, talk about kicking a guy when he's down. This is a neccessary ally in a very strategically important region. It's building up as a good counter balance to the Chicoms and to the slamofascists, so that we have 2 democracies as allies on either side of the slamic divide -- Israel and India.

[Cronos]

no, all you need to do is tax IBM's US profits at a higher rate based of their use of offshore labor. If they profit in the US, and contribute nothing to the tax base in the form of US employment, then they should pay US taxes another way.

IBM does get quite a large percentage of it's profits from outside the country. This move you state is not viable or possible and may lead to a kind of prohibition type scenario

[Cronos]

then they would face a 100% tax on their US profits, and since they make no money selling anything in India but rather make it all here

Quite incorrect, as I said above, IBM makes it's money from all countries all over the world. It is a multinational company. It sells PCs, servers, mainframes in the US, Europe, Japan and yes, even India. A MNC like IBM is a difficult entity to judge. What you state may be viable for a company that is only US based, but now nearly every company in the world strives to be multinational. Even Wal-mart has a subsidiary outside -- in the UK with ASDA. So Wal-mart is a MNC.

[Cronos]

So when competing internationally IBM is going to be happy about losing contracts to Indian firms they trained

IBM has opened up fully owned subsidiaries outside the country. So, it's not training any outside company, it's sending work to different employees.

[Cronos]

India and China, combined with their corrupt and totalitarian governments,

Helllooo, you're lumping a democracy with a commie govt????

[Cronos]

IBM is not lowering their global service fees, trust me on this.

IBM will lower it's fees to suit it's clients. The clients for it's global servicing are not you and me, but big corp.s which know how to play hardball and ask for cheaper hourly rates. For instance American Express has handed over it's tech work and ownership of it's systems to IBM, so they constitute a major client for IBM. Amex can negotiate for cheaper hourly rates and they must have done so.

[Cronos]

BBM sign up Citibank

Citibank outsources it's work to Citicorp which was the tech arm of the company but Citibank decided it made more sense to separate that arm and make it a separate company. Citicorp is also split with programmers worldwide.

[Cronos]

To quote the link you sent:
Worlds within the World? The First, Second, Third World and the Forth World A rough probably outdated model of the geopolitical world from the time of the cold war. There is no official definition of the terms of the first, second, and the third world. Following OWNO's explanation of the terms. Four Worlds After World War II the world split into two large geopolitical blocs of contrary views on government and the politically correct society: the bloc of democratic-industrial countries within the American influence sphere, - the "First World" - and the Eastern bloc of the communist-socialist states, the "Second World". The remaining three-quarters of the world's population, states not aligned with either bloc were regarded as the "Third World." The in the early 1970s coined term of the "Forth World" refers to widely unknown nations (cultural entities) of indigenous peoples, living within or across state boundaries.

The version you refer to calls Singapore and South Korea third world countries, HUH????

A revamped version would call developed countries first world, developing countries as 2nd and underdeveloped as 3rd world. In the revamped first world we'd have the US, Canada, Australia, New Zealand, Japan, S. Korea, Singapore, Malaysia, Brunei, the UAE, Bahrain, Chile, Western Europe and GReece and maybe Turkey, Kuwait/Qatar. They may be 2nd world along with Eastern Europe, Russia, China, India, Iran, Oman, Egypt, Brazil, Mexico, parts of Central and South America and Polynesia,South East Asia barring Burma (Myanmar). Third world would be underdeveloped countries with no hope of getting developed in the near future. These would be North Korea (unless unification happens of course, maybe not even then), Burma, much of Africa and Cuba.

[Cronos]

And furthermore comparing your link with your statement :China still falls into the third-world category,
well, it doesn't match. China is second world according to the outmoded definition which considers first world as being Western countries and allies, second as commie states and third as the non-aligned.

[Cronos]

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

You are painting with a very broad brush there. Countries like Israel, Bahrain, the UAE and Oman have lesser deposits of oil and they have diversified. I won't talk about Israel as well, their economy is not booming only because of the troubles, but think of the UAe, they have diversified quite a bit and Bahrain has practically no oil but is a banking and trading hub -- it's been one since the Sumerian days when it was called Dilmun. Saudi A Will fall and Kuwait too when the oil goes but don't expect that to happen to Egypt or Iran or the countries I've mentioned above -- these were civilised developed nations when our ancestors in Europe were wearing animal skins.

[cp124]

This outsourcing will help PC buyers. It will help American small businesses by lowering costs and freeing up capital so they can expand and hire more workers and devote more money to research, to finding the next generation of technology. The money saved nationwide will help create whole new businesses and even whole new industries. It will have the same effect as a tax cut.

blah,blah,blah,blah,blah,blah,

[Non-Sequitur]

Relative value of work, and costs associated with the work being done.

They're not considering that now. Why should they in the future?

[Paul Ross]

And in the meantime, all American consumers and businesses benefit from the savings that come from their labor.

False. And knowingly false.