Posted on 06/06/2006 6:24:52 PM PDT by G. Stolyarov II
IBM is staffing up in low-cost countries. To know one's surprise two of those countries are India and China. One more country is Brazil and IBM is also taking aim at Eastern Europe.
But just how much is IBM depending on these countries and for what?
Eastern Europe - IBM has grown from 2,900 workers to 5,125 workers since 2003.
Eastern Europe provides data centers, service skills centers and Linux development labs.
The work force in Brazil has doubled since 2003 - 4,500 to 9,000 and they are providing data centers, call centers and Linux development.
The Chinese work force has grown nearly 75% from 4,200 to 7,200 and IBM depends on them for software development, data centers, demonstration research and other research.
The big winner however is India. IBM's work force has grown by almost 500% from 9,000 workers to 43,000 workers who are operating data centers, call centers, and are doing software development and research.
Those specifically necessary for national defense. Uncle Sam can pay for maintaining that.
"Those specifically necessary for national defense."
Question....."Whats your favorite flavor of ice cream ?"
Response....."The one that tastes the best...."
outsourcing the good jobs; importing cheap illegal labor.
All so middle-America gets screwed.
Yes, but in a crisis, you may want to utilize civilian industry as well, because Uncle Sam (me and you) can't afford to maintain a really large defense industrial base indefinitely. If the civilian industry is gone, that's a bad thing.
What capabilities and infrastructure (technological and industrial) do you think it's in our NATIONAL INTEREST to retain?
Be concise.
The days of mass mobilization are finished. Great power wars of national survival are history, because the end result is the mutual destruction of the warring great powers. In other words, great power wars are of necessity extremely limited, because "national survival" means not pushing the other guy to the point of using nuclear weapons.
Well, Good Luck to them. I spent 10 months last year cleaning up an Indian mess. Maybe I should send some info to IBM, in case they need me :-)
I didnt ask the question...Biker Joe did.
Anything you can share?
Third World Wages = Third World Country
First World Wages = First World Country
When you remove the First World wage jobs from this country to 'cheaper' climes, what you have left here are the Third World wage jobs. When we become impoverished here, just who do you think is going to buy your 'cheap' products?
Keep you wide open, free-trade Third World. I'm not ready to live in your dump yet.
http://money.cnn.com/2006/06/06/technology/ibm_india/
Analyst: IBM needs more than just India
Aggressive moves overseas are applauded but investors say Big Blue must do more; facing down HP, Accenture and Wipro.
By Amanda Cantrell
June 6, 2006: 4:27 PM EDT
NEW YORK (CNNMoney.com) - IBM's sales in India soared 60 percent in the first quarter while sales overall were flat, so it's easy to see why the world's biggest computer company said Tuesday that it's tripling its investment there to $6 billion over three years.
But the aggressive move into one of the world's fastest-growing markets by itself is unlikely to help IBM (Research) stock break out of its slump, industry analysts and investors say, even though the company is making some smart moves as it continues to reinvent itself.
Finding hot growth markets like India is imperative for IBM, which, like other large tech companies, faces the challenge of how to keep growing as a $91 billion company while fending off new challenges from Hewlett-Packard (Research), Microsoft, Sun and newer competitors overseas.
Armonk, N.Y.-based IBM is holding its annual investor and analyst conference in Bangalore this week, meeting for the first time in India's technology hub.
Concern about growth is one reason the company's share price has suffered. Shares of IBM are down 3.2 percent this year, compared to a 1.6 percent decline for the Nasdaq, and the shares have been stuck below $100 for the past four years.
Another problem is the company's inability to articulate its strategy clearly, according to Kim Caughey, an analyst at Fort Pitt Capital Group whose firm owns shares of IBM. Caughey said the company has done a good job restructuring and reshuffling its assets but not so well on selling itself to investors.
"What they should do is say something like, 'We're not your father's IBM'," Caughey said. "I'm disappointed that the company isn't doing a better job of explaining how it's rejiggered its array of products and what effect that has had. It isn't priced in yet - people just don't get the story."
The story untold
Caughey said she's still bullish on IBM's long-term prospects despite the stock's weakness. And she thinks IBM's investment in India - "going to where the programmers are," as she puts it - makes perfect sense, especially given India's extensive, and less expensive, talent pool.
Still, she's frustrated with executives at Big Blue for not articulating their long-term vision for the company - something she thinks has kept a lid on the stock.
In recent years, IBM has gotten out of making low-margin items like personal computers and disk drives in favor of higher-margin services and consulting businesses, a move the company says has paid off.
Meanwhile, CEO Samuel Palmisano is cutting costs, slashing 13,000 jobs last year and reorganizing the services division. When Palmisano took over as CEO in early 2002 he faced the challenge of continuing the overhaul of Big Blue engineered by his predecessor Louis Gerstner.
"I look at this company and I see that it's way better than it was five years ago when it was a lot more expensive," Caughey said. "I don't see other people getting the same message."
And while she's encouraged by the more aggressive move into India, saying it is reassuring to see the company planning for the future, she noted that having an analyst event in Bangalore makes it difficult for some investors to get there. That means those who miss the trip missed another chance to understand IBM's long-term strategy, she said.
"It's those kinds of things that make me go, 'You know how to market to customers; why can't you market to investors?' "
Roger Kay, president of technology research and consulting firm Endpoint Technologies, agreed that the move into India makes sense, given that, along with China, it represents one of the two largest markets in the developing world. But he thinks the company needs to do more in other markets.
"It's necessary, but it's not sufficient," said Kay of IBM's India investment. "They have to make a number of commitments in the developing markets to harvest growth that's coming online. They need to look at Brazil, Russia, Eastern Europe, Southeast Asia and potentially parts of Africa."
Competition getting tougher
Peter Misek, senior technology analyst at Cannacord Adams, is also bullish on IBM long-term, though he recently cut his rating on the stock to hold over some short-term concerns.
As for IBM's moves in India, Misek points out that the company faces local competition from Indian firms like Infosys and Wipro.
That's to say nothing of more well-known players like Accenture (down $0.03 to $27.44, Research), Sun (down $0.05 to $4.37, Research) and particularly HP, which Misek said is becoming a more aggressive competitor. The company also faces aggressive competition in its services division, Misek said.
"A lot of the contracts that were signed seven to 10 years ago are up for renewal, and pricing has gotten more aggressive than we'd expected," he said, noting that while changing suppliers can be expensive, some companies are considering it because of the increased price competition.
For those reasons, Misek also cut his price target on IBM from $100 to $85, despite what he views as a promising long-term outlook and what appears to be a compelling valuation. The company currently trades at 13.5 times expected 2006 earnings versus 15.2 for the S&P 500 and the hardware sector's multiple of 17.5.
Cannacord's Misek does not own shares of IBM and his firm has no banking ties to the company. Endpoint's Kay does not own shares of IBM, and his firm does not do investment banking.
Yes, but sooner or later this is going to catch up with us. If we're minimizing how many engineers, manufacturers, skilled laborers that we have in this country, what happens when the country we sent all of our skills off to turns on us? What happens when your computer software that controls many aspects of your life are written in a country that is hostile to our own and there isn't anyone here who has a darn clue how to see what it does? What happens when we send the responsibility of designing our cars to a guy in another country becausae he'll work for 3 cents an hour and he sells the design to someone else to use against you?
We're selling our ability to design and manufacture stuff off to countries that don't really like us and don't give a crap how our economy is doing or if we can defend ourselves and have no interest in competing fairly. Sooner or later it's gonna catch up.
No one seems to care, but it's gonna happen if CEO's don't start worrying about things further out than next quarter's earnings report.
Bill Gates is recognized every where he goes in China. Young people there hang from the rafters and scalp tickets just to hear him speak. In China today, Bill Gates is Brittany Spears. In America today, Brittany Spears is Brittany Spears – and that is our problem.
Forget the birthright crap. You don't have a birthright, other than the freedom to work your tail off. Be more useful than anyone in the world, or be lunch.
Be as hungry and driven as they are, or be beaten. No choice, no option, no alternatives. Now jump.
Amen.
Didn't you read my post? I clearly stated that we should outsource all of our jobs and live off of the government so we can have lots of cheap stuff. Additionally, to help our cause, I expect you to go to your boss tomorrow and demand he or she lower your wage to what someone in India would do your job for. If you are working for more than that, then you are hindering our ability to get cheap stuff and live off of the government.
Phase one is to export all skilled jobs. Phase two is to import Third World people to do the remaining unskiled or semi-skilled jobs. See, our brilliant politicians are thinking about us and have us covered both ways! They will make America the biggest sub-Third World country.
Also, I want an update to confirm you lowered your salary to Indian levels so we can make sure you are really with us on this issue.
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