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.

[Non-Sequitur]

There's plenty of evidence that outsourcing to lower-wage regions does not always reap the claimed benefit of higher profits - in fact, there are plenty of stories of companies that have outsourced only to find out that the result is lower quality, loss of control, less ability to respond quickly to the changing demands of the marketplace, and consequently lower profits.

Sure there is, but that hasn't stopped more and more companies from outsorcing. Since corporate America is focused only on the short term financial statemtent rather then the long term returns then they will continue to go where the work can be done cheaper, regardless of whether it is done better.

[snippy_about_it]

You're right. The decision makers only think about how to better themselves in the immediate, not the future of their children or our country.

[staytrue]

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

You discredit yourself when you describe people working for wages that are low by US standards, but provide a decent living by india standards, as slave labor. They are anything but. The cost of living in india is cheap enough, that they are very middle class.

My brother worked on a farm in 1960 and made a very repectable dollar an hour. Of course the cost of living was low back then, just like it is in India now.

[The Old Hoosier]

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.

You all have the mentality of government workers who will protect their fiefdoms at any cost. Democrats fight the outsourcing of these government jobs, which are wasteful and unnecessary, even though it could result in savings to taxpayers that would create more private sector jobs that actually serve a useful purpose.

[unixfox]

Is it just me or do I hear that giant sucking sound again?

[SAMWolf]

Until the politicians and bureaucrats jobs are threatend with being sent overseas or being done by H1b workers, they won't give a rat's ass about anyone else's job.

They're protected and get richer and grab more power, that's all that matters to them.

[88keys]

Everyone should have to read your post...!

[RockyMtnMan]

There's a much bigger world outside the "PC" market my friend. We are not talking about $400 PC's we're talking about multi-million dollar software development/support contracts.

You won't innovate squat without the right talent domestically. It's just a matter of time before some big Indian firm starts competing head-on with IBM global services cutting into their market share.

The IBM'ers that start their own companies will one day have to compete with the Indian firms that IBM itself is creating. Apply your logic to IBM India, when they leave to start their own companies who do you think they'll be competing with?

[The Old Hoosier]

when they leave to start their own companies who do you think they'll be competing with?

You're being very short-sighted. The competition will, again, help American businesses by cutting their costs. You are viewing the American economy as something static and unchanging, which does not develop to meet the circumstances, thus improving our standard of living constantly over time. You are wrong to do so.

We don't need to have a monopoly on programmers in order to compete globally. Besides, we would not be able to have such a monopoly even if we wanted one. What are you going to do, erect tariffs against programs e-mailed back to the U.S.?

[Mamzelle]

re: What are you going to do, erect tariffs against programs e-mailed back to the U.S.?)))

Well, we could put a nice surcharge on the money going out of the country to India.

[oceanview]

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.

[clamper1797]

I will be flying to North Carolina to interview with IBM next week ... please cross your fingers ... as I am

[The Old Hoosier]

all you need to do is tax IBM's US profits at a higher rate based of their use of offshore labor.

Great idea! Sounds like a good way to send all the jobs to India.

[oceanview]

for what job position? "offshorer", is that one of their job titles now?

[oceanview]

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, I don't think they really want to do that. Unless they want to operate as a non-profit operation, do you really thing the upper management raking in 7 figure salaries and flying on Gulfstreams to lunch wants to do that?

[The Old Hoosier]

Your plan to tax foreign corporations out of doing business here will drive consumer prices through the roof, costing millions of American jobs, decreasing our standard of living, and increasing our cost of living.

You have the prescription for another Great Depression.

[The Old Hoosier]

The negative effects will be felt not only here, but in the third world as well. As soon as you are voted out of office and your unsustainable policy is repealed, the problem of cheap labor will be even worse, because you will have crashed foreign markets and destroyed their few viable businesses.

Much better to help improve their economies somewhat and thus reduce the wage gap, making outsourcing less cost-effective.

[The Old Hoosier]

Sorry, see my 57.

[cpst12]

>>Much better to help improve their economies somewhat and thus reduce the wage gap, making outsourcing less cost-effective.

Reduce the wage gap? You willing to take a 80% cut in pay to get us started on reducing that gap?

[clamper1797]

I don't know ... I think it's for an ASIC designer on shore