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.

[The Old Hoosier]

It won't require an 80% cut in pay, unless I was being ridiculously overpaid to begin with. American salaries and standards of living will not go down--they almost never have.

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.

Don't you think America would be better off if Mexico were wealthy? We wouldn't have an illegal alien problem, that's for sure.

[RogueIsland]

Would you like to pay more for something because those who produce it receive high salaries? Or would you be happy to buy the same product at a lower price when produced by lower paid workers?

As long as the quality is good, I would be more than happy to pay more for the American-made product. No hesitation on my part. I would assume that most loyal Americans would be glad to do the same if they are financially able.

[Winfield]

I am planning to buy a new computer next year, but NOT FROM IBM. I have suggested to the RNC that Republicans come up with a plan to penalize companies (perhaps via the IRS)
that lay off Americans in order to move their factories to foreign countries. Perhaps, when it becomes less lucrative companies like IBM will choose to stay in America.
I recommend that every one of you e-mail this article about IBM's move to China, to your Congressman, Senator & the RNC. Suggest that "tax penalties" might be in order for IBM and the like.

[The Old Hoosier]

American companies' foreign investments create jobs here at home--you could even say they help keep America on top. It's not a good idea to start taxing money that leaves the country. It will increase costs for American consumers and businesses, ultimately costing jobs and stunting economic growth and the creation of new jobs.

[RockyMtnMan]

So when competing internationally IBM is going to be happy about losing contracts to Indian firms they trained? Isn't this what offshoring is supposed to help IBM with? What about Chinese companies copying source code, relabeling it ChiComSoft and selling it to US companies for a tenth the cost?

What's wrong with the US owning a monopoly on the world stage? We could maintain a monopoly for a long time based on our current technological lead. Every developing country in the world would have to come to us for their business productivity software or face defeat due to poorly run business units.

Training turd-worlders on the latest and greatest methodologies and practices is inviting them to compete against us on the world stage at a tenth the cost.

The worst thing a large corporation can do to itself is create a highly efficient hungry competitor that is familiar with their business practices. Now combine those points with dirt cheap labor and contacts carried over from their "IBM days" and IBM will have it's worst nightmare to deal with soon enough. Once they start losing contracts they will have to cut back until they are able to compete once again (when salaries equalize).

[Beck_isright]

I guess they didn't pay any attention to Dell's India disaster. Ah well, time to short IBM again.

[Benrand]

Howard Dean said that it is George Bush's fault that jobs are being shipped to the Soviet Union.

[The Old Hoosier]

Would you pay twice as much for the American product? You might have to, if some people on this board get their way. Competition--including foreign competition--keeps the prices of American products lower. Our standard of living would plummet if we simply decided to segment our economy from the rest of the world.

[StolarStorm]

If you can outsource programmers you can outsource almost any office worker. Young people will have no upward mobility due to all of this. Guess you already got yours... so why should you worry.

[oceanview]

given the populations and birth rates of India and China, combined with their corrupt and totalitarian governments, there is a statistically infinite supply of cheap labor there, forever. So that idea is not going to work.

[oceanview]

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

[tubavil]

Done. They just lost a Christmas laptop purchase.

[oceanview]

then why does anyone buy Craftsmen tools (as an example)?

Cheap goods does not alone define standard of living. In fact, its say more about jobs and wage growth in our economy that many Americans can ONLY afford cheap foreign products in many cases. Furniture is a good example of this, the entire furniture industry is going to China. I guess no one had furniture in the USA 20 years ago?

[Dan from Michigan]

THIS can kill us in 04.

[RockyMtnMan]

Of course not, they are increasing their margins. Which is the story for every offshoring effort out there. Just a matter of time before the rest of the "professional" working class begins to feel that heat of competition. The last to go will be the "creative types" due to their understanding of American culture and Lawyers (due to their leach-like nature).

Thankfully the market is picking back up. Unfortunately it will mask the effects of offshoring until the next down turn. The only hope is that boomers leaving the workforce will be replaced domestically rather than internationally.

[oceanview]

how old are you?

best of luck, you'll be competing with the Chinese in that position. Keep your ears and eyes open on the job, attend trade show conferences and try and network within your field, spot trends, take as much training as often as IBM is willing to pay for it, be ready to make a move in the future if need be. In other words, don't just sit in a cubicle and design chips.

[oceanview]

2008, that's when this chicken comes hom to roost. Its not happening fast enough to gel as a 2004 issue.

I post the same thing on every thread: this issue will get Hillary elected president in 2008 if left unchecked.

[dfwgator]

Forget it. Hillary is a big pal of Tata Consultancy, the largest Indian outsourcing company.

[Dan from Michigan]

I don't think it'll get Hitlery elected(senators are the problem), but maybe a governor.

NAFTA was Bill Klinton's baby.

[The Old Hoosier]

So when competing internationally IBM is going to be happy about losing contracts to Indian firms they trained? Isn't this what offshoring is supposed to help IBM with?

No. It is supposed to cut their operational costs, not to permanently eliminate the possibility of competition against them, which is impossible anyway.

If Indian firms do proliferate and compete with one another, it will further cut their costs, and yours. And if Indian programmers and engineers do try to compete with IBM--a long-term possibility--it will make your cost of living go down even further and free up even more money for more American investment at home.

But also remember, as other countries' economies improve through their commerce with us, they will start buying computers too, and there will be room for many competitors on the world stage.

What about Chinese companies copying source code, relabeling it ChiComSoft and selling it to US companies for a tenth the cost?

They already do that, working from here in the U.S. That's a separate problem.

What's wrong with the US owning a monopoly on the world stage?

Such a situation is both unattainable and unsustainable, unless you want to assume that everyone in the Third World is too stupid to compete. Besides, if not for Third World labor in a variety of industries, you would not be able to afford the computer you are working on--costs would be two, three or four times what they are today.

You fear, as many do, that such labor will drive America's economy to destruction. But ask yourself, has it brought us in that direction? In fact, no, it hasn't. We are more prosperous than we ever have been before, and the rest of humanity is beginning to share that prosperity by doing business with us. Our salaries will not diminish, but theirs will rise. I think that's a good thing, myself, and it will give them other things to do with themselves besides immigrate here illegally and collect foreign aid and charity money.

And I don't see any reason to compare poor nations with feces. After all, they are human beings, children of God, too.