Posted on 08/21/2003 9:44:06 AM PDT by ZeitgeistSurfer
Veteran IBM-watchers know how testing it is to read one of the company's financial statements. In the early days of the cold war, Churchill described the Soviet Union as "a riddle wrapped in a mystery inside an enigma". But compared to earnings releases from companies such as Apple and Sun - who provide terse and lucid declarations - you can be forgiven for thinking of IBM's announcements as a cloud wrapped in a fog containing a temporary heat-haze.
However, this much is clear: IBM has shed 15,000 jobs in the past quarter: 1400 from the microelectronics division and a staggering "14,213 Global Services personnel" in response to "the recent decline in corporate spending on technology-related services". To balance the books, IBM also bunged its recent acquisition, PwC, by almost $400 million.
In an SEC filing posted last week, IBM maintained that demand was strong. So strong, it had to conduct a private pogrom in its own services division. Clearly, something doesn't add up - even by IBM's own admission.
Perhaps an email from a soon-to-be redundant HP employee to The Register sheds some light on the situation. HP announced earnings this week that fell below expectations and added that it would make 1,300 "unexpected" human sacrifices to cover the shortfall. In contrast to previous "sheddings" of fluff in the "labor market", the middle class now feels the pain.
"Sorry but I'm due in early Sunday to train my replacement in Bangalore," the (almost) ex-HPer explained. "It's because of the time difference."
Offshore drilling
Hidden beneath the already hard-to-find news of job cuts is a massive transfer of IT resources to India and China. While only a few years ago we were promised a "Long Boom" of infinite prosperity, by "gurus" such as Wired executive Kevin Kelly, it now appears that every tech job can be cut or outsourced with impunity. Kelly is never happier, by his own admission, than when he's lying down in Pacifica dreaming of insects.
For the rest of us, needs are rather more pressing.
Not to appear to be picking on IBM or HP in particular, there doesn't seem to be a tech job left that's safe.
This has yet to emerge as an election issue, although it represents an assault on middle class expectations that's unparalleled in peacetime. But it is important and needs some context.
As the world's largest democracy, and with a philosophical and scientific tradition that (outside the Muslim world) is second to none, India has every reason to look upon the recent occidental outbreak of what we call "capitalism" as a temporary aberration.
It's worth nothing that in common with his fellow Victorian political economists, Marx found the oriental model so strange that he excluded it from his theories entirely.
But outbreaks of tech independence abound. The People's Republic of China has shown both a cavalier disregard for Western IP (aka "intellectual property") and boasts a proud confidence that its own homegrown talent can transform a pay-for "IP" import into an indigenous social resource. [See Trade Wars II: China shuns Qualcomm - no CDMA tax! - EU frets over China's 3G plan and Motorola gambles big on Linux, Sinocapitalism for more details].
Given China's astonishing historical legacy of engineering excellence, this is far from foolish. Dammit, weren't our kids supposed to bring home the bacon?
On this side of the Gulf, we're sure to hear cries of anguish, as the parents of expensively educated middle-class kids learn that their investment (and, in the US, this can be upwards of $120,000 per child) has gone offshore.
Which brings us to a particularly anxious conundrum. The prosperity that we felt was assured, and by rights, ours in the West no longer belongs to us. Those college dollars look like a poor investment, when a cleverer Indian can perform the same task for a tenth of the salary. So why did we spend all that money? Who, at what point, added enough "value" to justify the investment?
It's a good question. In a historical perspective the Indian, Muslim and Chinese engineers whose forefathers created so much of this intellectual infastructure are only reaping their due rewards. For Western kids, however, this does seem a bum deal. "Weren't we supposed to be clever[-er] than everyone else?" a recent graduate asked me recently. Well, er, actually no.
Smarts is as smarts gets.
Forget your O'Reilly PERL course, and follow the money. A course in Mandarin or Arabic is probably the shrewdest investment a parent can make right now.
Go west, my son... and then keep going
The inexorable logic of digital capitalism has rewarded companies such as Dell, which add no value, and pare costs to the bone, and ruthlessly punished systems companies such as Sun and Apple, which invest in R&D. For reasons best known to themselves, these companies invest in the hard stuff that can't easily be commoditised. Logic suggests that such companies are the bulwark against copy-cat Oriental opportunism.
While you might think much of the above is facetious, the West faces a very real problem: we have a surfeit of well educated kids who, if we accept the orthodoxies of asset-stripping capitalism, simply can't compete with foreign competitors without tilting the playing field.
When capitalism went digital, the first casualties were manual laborers. Now that skilled engineering jobs are being transferred offshore, the middle class is in the firing line, and this poses a very real crisis for a large and not-entirely unimportant section of society. Go to college, learn tech skills and - oops, sorry - you're job has just gone offshore. Please accept this redundancy slip and some small token that your worthless (hard-earned) contribution has enriched the global economy. Or as the creepier types insist, the global "eco-system".
Technology once promised us vistas of endless prosperity, and saw itself aloof from the obligations of political economy or globalisation. Now these pigeons are coming home to roost, and "technology" is more of a liability than it is a blessing.
It's dry, academic stuff to be sure. But when jobs are being lost on such an extraordinary scale, scarcely reported, is there a politician bold enough even to raise the issue?
In Cuba, you are guaranteed a job. Vietnam too. The government assigns you one and you can never, ever be laid off, ever again.
So if you don't think we're all doomed, you're a troll? What a happy-go-lucky place FR is.
On more serious note, my husband recently went to a CPE credit earning seminar. People who were talking about the big American Express (large employer here in Phoenix, financial service industry) lay-off and movement of hundreds of jobs to India. General consensus: it is a fluster cluck of epic proportions.
Bankruptcy law should be modified so the student loans could be discharged the same way as other debts. There is no way a Walmart employee will be able to pay back costs of advanced college degree.
We're all doomed.
I am saying the sending of the work to India is resulting in less than desirable results. That probably is bad news to you. You really like the idea of transferring our wealth to 3rd world hell holes. Then you can go there with your little church group and feel all warm and fuzzy and charitable.
Only an idiot can't make the connection.
No, only an idiot would make the connection.
Wait till the Russians start taking a significant piece of the action. They are very creative. All they need is good stream of revenue from 'mindless' work to support their creativity. I'm afraid that I'm not as optimistic as you are. The Chinese have targetted biotechnology and genetic engineering as the key strategic technology of the 21st century. They are plowing back their surplus (outsourcing) income into developing these fields very rapidly.
Haha. Sweet. Some anti-Christian rhetoric thrown in for good measure. Happy, happy people at FR.
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