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IBM Shifts 14,000 Jobs to India

Zonk posted more than 9 years ago | from the wave-goodbye-to-blue dept.

Businesses 1077

Omar Khan writes "The New York Times reports, 'Even as it lays off up to 13,000 workers in Europe and the U.S., IBM plans to increase its payroll in India this year by more than 14,000 workers.' Slashdot previously covered the black-and-blue strike, in which the union wondered, 'if other cost cutting mechanisms could achieve the same effect without cutting so may jobs.'"

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Message sent, but will it be received? (5, Insightful)

coupland (160334) | more than 9 years ago | (#12901664)

I'm sorry but IBM is speaking to European workers very clearly here, however I'm not sure they're listening. The constant strikes, the 5+ weeks of vacation, the voting down of the EU constitution to avoid US-style capitalism. These jobs are vanishing into India because of the cost and headache of dealing with European unions, workers, culture, and bureaucracy. Frankly it's a pain in the ass, and for a market that often has little growth potential. Asia isn't just where the cheap labour is, it's also where the growth is, and the governments eager to work with you, and the best bang-for-the-buck for companies seeking to invest. Until European workers learn to compete aggressively we'll keep on hearing stories like this of companies that just shrug and say "fine, have it your way." Apologies, but something's gotta give.

MOD PARENT UP (0)

nearl (612916) | more than 9 years ago | (#12901723)

Companies are out for profit. It is not immoral or wrong for them to seek service and products at the lowest cost.

Re:MOD PARENT UP (2, Insightful)

reidbold (55120) | more than 9 years ago | (#12901824)

Lowering cost itself is not immoral or wrong, but sometimes the means used to achieve the goal is immoral, or wrong.

Ok (1)

WindBourne (631190) | more than 9 years ago | (#12901897)

so you think that it is wrong for IBM to layoff in USA/EU. What do you suggest to lower Labor costs for IBM? Would you be willing to accept a pay and benefit cut to what IBM is paying in India?

Re:MOD PARENT UP (3, Insightful)

jonabbey (2498) | more than 9 years ago | (#12901843)

Just so long as they understand they're going to be selling their services and products at the lowest cost as well.

This whole thing is just the money sloshing around the planet to reach economic equilibrium. Soon enough wages will rise in India and the dollar and Euro will drop, and the pressures will relent somewhat.

I do wonder about the canonical science fiction question. It's already far more productive to have cheap computers do the work rather than expensive humans for a range of services. What happens over the next few hundred years as the collection of services done by computers grows ever-larger?

What good is capitalism for workers when there's absolutely no scarcity of labor? Money is just a measurement of scarcity, after all, and if there's no scarcity in labor, there's no money.

Re:Message sent, but will it be received? (1, Insightful)

lucabrasi999 (585141) | more than 9 years ago | (#12901737)

While I don't agree with all of the what coupland says above, I certainly don't think it is Flamebait. It is a valid point.

Re:Message sent, but will it be received? (2)

superpulpsicle (533373) | more than 9 years ago | (#12901789)

Why did poster get marked Flamebait?

IBM is a company that requires a workforce that can be slave driven and work every weekend 24x7. European companies have a history of limiting work hours with tea time and high number of vacation days. It's not fair to U.S and Indian counterparts in the same company, who work just as hard but lack the benefits.

Re:Message sent, but will it be received? (1)

jtogel (840879) | more than 9 years ago | (#12901774)

Why was parent modded flamebait? It's a completely legitimate opinion, even if the moderator does not agree, expressed without expletives.

Re:Message sent, but will it be received? (-1, Flamebait)

Anonymous Coward | more than 9 years ago | (#12901844)

It's flamebait because he criticized European socialism on a board where a lot of European socialists have mod points.

Re:Message sent, but will it be received? (1)

coupland (160334) | more than 9 years ago | (#12901779)

Yeah, folks, you don't need to agree with me but I was hardly flaming. People won't always say things you like to hear. Sometimes they'll be full of it, sometimes they'll be worth considering.

Re:Message sent, but will it be received? (5, Insightful)

yog (19073) | more than 9 years ago | (#12901798)

And US workers. From the article:
"I.B.M. is really pushing this offshore outsourcing to relentlessly cut costs and to export skilled jobs abroad," said Marcus Courtney, president of the Washington Alliance of Technology Workers, or WashTech, a group that seeks to unionize such workers. "The winners are the richest corporations in the world, and American workers lose."
They just don't get it. The winners are the consumer who gets to pay lower prices for the products and services. The other winners are the stockholders of the corporation who get higher dividends and portfolio value. Now, we all are consumers of IBM and similar high tech goods and services--every time we use an ATM, an insurance company, a bank, a personal computer--we are benefiting from offshoring of high cost labor and parts.

I think this group that seeks to unionize tech workers needs to rethink its strategy a bit. Raising the cost of labor will not provide for secure employment, quite the opposite in fact.

I don't like to see rising unemployment in the tech sector, either, but unionizing and legislating are not the answers. Innovation, entrepreneurship, and low tax overhead will help. We also have to face up to the fact that there are industrious and hard working people out there who will do our job on the cheap. We in the West need to wake up, start thinking more innovatively, and compete with our best tools: our creativity, education, and tremendous freedom to explore new business opportunities.

Re:Message sent, but will it be received? (4, Insightful)

DogDude (805747) | more than 9 years ago | (#12901863)

I don't like to see rising unemployment in the tech sector, either, but unionizing and legislating are not the answers. Innovation, entrepreneurship, and low tax overhead will help. We also have to face up to the fact that there are industrious and hard working people out there who will do our job on the cheap. We in the West need to wake up, start thinking more innovatively, and compete with our best tools: our creativity, education, and tremendous freedom to explore new business opportunities.

All true, but it's waaaaay too late to fix this. If anything, IT industry workers as a whole needed to realize this 10 years ago. Today, IT people still think of themselves as deserving of an inordinately large paycheck. And what's interesting is that IT people that I know and that I have talked to all seem to keep this mentality even while they're unemployed. I got my wake up call years ago, and left the IT industry for good, because I know that I'm not willing to sit in a fucking cubicle and commute with the lemmings every day for less than $xx an hour.

Re:Message sent, but will it be received? (1)

digidave (259925) | more than 9 years ago | (#12901909)

You forget that the people who get laid off are the consumers and stockholders who can no longer afford the lower prices.

Cheap products don't matter, what matters is that consumers can afford those products. Unemployed people can't.

Actually, all major business are speaking (3, Informative)

WindBourne (631190) | more than 9 years ago | (#12901860)

To the USA and EU. The jobs disappearing from EU were preceeded by US layoffs some time ago. And it is not just IBM, but I think that many here know that already.

Newsflash! (1)

Spy der Mann (805235) | more than 9 years ago | (#12901886)

Companies don't give a damn about the people. No matter how evil and wretched is what you're doing, just make sure it's not illegal, and you're fine.

(Only in America!)

Re:Message sent, but will it be received? (4, Insightful)

bstarrfield (761726) | more than 9 years ago | (#12901907)

So competition means having European workers work at Indian wages, despite IBM being highly profitable?

So you want governments and corporations to work together to ensure that the highest goal is ensuring that corporations are profitable?

Do you truly understand what your saying? Workers have fought for literally centuries to be treated with some degree of respect. Corporations are now making record profits, and still seem to find it necessary to replace their workers with cheaper labor? What the hell is it for? What exactly is the point of all this - we'll all be back to 6:00 AM to 9:00 PM hours, with no vacation, at half the wage so that the elite have growth of their profits.

Capitalism works because people assume that they have a chance of advancing, that the lives of their children will be better. If globalization simply means a gross reduction of wages and transfer of assets to the wealthy, capitalism will lose popular support. How many former IBM employees are going to be praising outsourcing?

Re:Message sent, but will it be received? (0)

Anonymous Coward | more than 9 years ago | (#12901917)



I'm sorry but IBM is speaking to European workers very clearly here, however I'm not sure they're listening. The constant strikes, the 5+ weeks of vacation, the voting down of the EU constitution to avoid US-style capitalism. These jobs are vanishing into India because of the cost and headache of dealing with European unions, workers, culture, and bureaucracy.



There are no 'constant strikes' in Europe.
Only in Paris, and thats because French government employees are legally allowed to strike. The voting down of the EU constitution does not matter to companies such as IBM. If anything, its a vote against EU bureaucracy.

It is true that labor forces in India currently are much cheaper than labor forces in Europe.
Labor forces in Europe are still cheaper than
labor forces in the US, though.

It is jobs from both the US and Europe which are being moved to India and China. See, e.g., General Motors.

Thomas

Re:Message sent, but will it be received? (5, Insightful)

Jeremi (14640) | more than 9 years ago | (#12901925)

Ah yes, the race to the bottom... in a few years we'll hear about jobs moving from India to Ethiopia, because the Indians are too picky about things like "wanting food feed their children" and "reducing the work week to 80 hours" to be competitive in the global marketplace.

other methods (2, Insightful)

Threni (635302) | more than 9 years ago | (#12901668)

> 'if other cost cutting mechanisms could achieve the same effect without cutting
> so may jobs.'"

They'll just do that too!

First! (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12901669)

Me me me me!

Re:First! (0)

Anonymous Coward | more than 9 years ago | (#12901881)

Nope nope nope nope!

oops (3, Funny)

swelke (252267) | more than 9 years ago | (#12901673)

And this happens just when I was starting to think of IBM as the good guys...

Re:oops (3, Insightful)

rkz (667993) | more than 9 years ago | (#12901764)

Beyond IT, every job that is a non-manufacturing, desk job and can be done remotely over the phone and a network is a candidate to be outsourced to a business processing center outside the United States and typically in India. The people who are worried are not your run of the mill hippy protesters, they are from all walks of life who are concerned about the erosion of the 'American way.' Someone losing their job to a contract manufacturer in China or an IT services company in India today is less likely to find alternate employment in a hurry.

Re:oops (1)

richdun (672214) | more than 9 years ago | (#12901878)

Nah, we're transitioning to thinking IBM is the bad guy and Intel is the good guy. We hope to have the transition complete by 2007 or so. Don't worry, we'll still support you in the meantime, but only at about 60%-80% speed.

Re:oops (1)

DogDude (805747) | more than 9 years ago | (#12901914)

"good guys" and "bad guys" only exist in the movies. You certainly can't categorize giant multinational corporations as "good guys" or "bad guys". That just doesn't make any sense.

shameful (1)

the_loon (742522) | more than 9 years ago | (#12901675)

Really shameful... first post too, also shameful

Re:shameful (1)

Nom du Keyboard (633989) | more than 9 years ago | (#12901786)

first post too

Not even.

Shameful.

Union (3, Informative)

ch0p (798613) | more than 9 years ago | (#12901676)

Here [allianceibm.org] is the IBM Union website, if anyone is interested.

welcome to the real world (2, Insightful)

Anonymous Coward | more than 9 years ago | (#12901679)

don't worry, you are not alone. accounting, HR, legal, even biotech and practically everything else you can think of is subject to offshoring. guess who's in the best position now? carpenters. plumbers. electricians. whoops, get ready for people to re-evaluate college and knowledge work on a grand scale.

Re:welcome to the real world (0)

Anonymous Coward | more than 9 years ago | (#12901836)

Universities are a cult out to make as much money as possible. Just watch as "somehow" a bachelor's degree will be required to be a plumber, carpenter, electrician, etc...

Re:welcome to the real world (1)

WickedClean (230550) | more than 9 years ago | (#12901876)

Yep, to hell with technology.

Right now healthcare is the field to get into. Get a nursing degree and you'll be set. I wouldn't recommend anyone bother with any kind of tech degree. Teach yourself computers and get an A+ and Network+ on your own time.

Learning a trade won't hurt either. Lot of money to be made in contracting jobs, but you have to be willing to work for a living.

Outsourced First Post (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12901684)

Outsourced First Post

That's the free market at work. (2, Insightful)

CyricZ (887944) | more than 9 years ago | (#12901686)

That's just the free market at work. If the price of labor is cheaper there, then that is where labor will be purchased. It's just as simple as that.

Re:That's the free market at work. (3, Insightful)

nharmon (97591) | more than 9 years ago | (#12901735)

Except, we're beginning to realize that you do indeed get what you pay for.

Re:That's the free market at work. (1)

nuggz (69912) | more than 9 years ago | (#12901772)

And most people are cheap, just look at the sucess of Walmart.
Until people are willing to pay more, this is what we'll get.

Can you give some tangible examples? (4, Insightful)

CyricZ (887944) | more than 9 years ago | (#12901800)

I see that you're claiming that Indians are unable to produce quality software and hardware designs. Can you please give some tangible examples/proof of this, and the resulting failures? Indeed, what makes an Indian any less of a programmer than an American or a European?

Re:Can you give some tangible examples? (1)

pete6677 (681676) | more than 9 years ago | (#12901899)

It's not that foreign programmers are any less smart or capable, but most outsouring projects, and for that matter many in-house projects, are set up to fail due to lack of planning. When communication is lacking even between workers in the same building, how can the project possibly be a success when people on the other side of the world have no idea what their coworkers are doing with the system that they will eventually need to be able to interface with? It's the processes that cause offshoring to fail, not the people.

India now has more demand than supply (1)

Colin Smith (2679) | more than 9 years ago | (#12901827)


Indeed. Supply and demand. I'm sure IBM will *try* to hire 14,000 employees.

http://news.zdnet.com/2100-9589_22-5730972.html [zdnet.com]

Guess what this means, Indian workers are going to be able to demand higher wages, so they will.

Re:That's the free market at work. (3, Interesting)

lucabrasi999 (585141) | more than 9 years ago | (#12901870)

That's just the free market at work. If the price of labor is cheaper there, then that is where labor will be purchased. It's just as simple as that.

Agreed. And, at some point in the future, the cost of doing IT in India will become expensive relative to doing IT in China or Kenya, then the same thing will happen to India that is happening here in the US.

Of course, since India has a population of over 1 billion, I wouldn't hold my breath, waiting for that day....

I.B.M == ??? (2, Funny)

ArielMT (757715) | more than 9 years ago | (#12901688)

Does IBM now stand for "Indian Business Machines"? If they're scaling back so much on the two most developed continents, they don't seem so "international" anymore... what dinosaurs.

Re:I.B.M == ??? (2, Insightful)

ndansmith (582590) | more than 9 years ago | (#12901766)

IBM is a dinosaur for staying on the cutting edge of the global economy? They are moving to the fastest developing continent, Asia, which has the most potential right now. I think that other tech firms are dinosaurs for staying rooted in the USA and Europre.

Re:I.B.M == Solutions for a Small Planet. (2, Insightful)

Tackhead (54550) | more than 9 years ago | (#12901826)

Suit: "Why did you drag me out here?"
New Hire: "$4 a square foot is why I dragged you out here."
Suit: "Sure, it's $4 a square foot, we're in the middle of nowhere."
New Hire: "We're not in the middle of nowhere. How'd you get here?"
Suit: "Airport."
New Hire: "Yeah, airport, highway, telephone."
Suit: "Internet."
New Hire: "Internet."
Suit: "Genius. $4 a square foot, and $4 an hour. You're fired!"

IBM. Solutions for a small planet. :)

I'm screwed? (3, Funny)

g0dsp33d (849253) | more than 9 years ago | (#12901691)

I guess a programming major insn't enough. Now I need to learn Indian as well.

Re:I'm screwed? (3, Informative)

grungebox (578982) | more than 9 years ago | (#12901741)

I guess a programming major insn't enough. Now I need to learn Indian as well.

Maybe you need to learn to be culturally literate. "Indian" isn't a language. Likewise, "programming" isn't a major. It's a skill. Computer science is a major. That's like saying "typing" is your major rather than, say, English.

Re:I'm screwed? (1)

B3ryllium (571199) | more than 9 years ago | (#12901749)

I think the Calcutta Learning Institute of Technology has a distance program.

Re:I'm screwed? (0)

Anonymous Coward | more than 9 years ago | (#12901934)

Is anybody else reading this is as CLIT?

Re:I'm screwed? (2, Insightful)

14erCleaner (745600) | more than 9 years ago | (#12901753)

I guess a programming major insn't enough. Now I need to learn Indian as well.

Don't worry, most of the IBM employees in India speak excellent English. Besides "Indian" isn't a language.

Re:I'm screwed? (2, Insightful)

stoolpigeon (454276) | more than 9 years ago | (#12901754)

If you think you need to learn 'Indian'-- I'd recommend some basic geography and general knowledge of the cultures in the country before you take on language training.

Re:I'm screwed? (1)

Bob McCown (8411) | more than 9 years ago | (#12901765)

"Thank you, come again" should be all you need, if around here is any indication.

Re:I'm screwed? (4, Informative)

aprentic (1832) | more than 9 years ago | (#12901850)

The official language of India is Hindi. But English is the language of business, politics, and technology.

Re:I'm screwed? (1)

civad (569109) | more than 9 years ago | (#12901869)

Learn Indian.. as in... Hindi?
Marathi?
Sanskrit?
Tamil?
Telugu?
Bengali?
Or any of the other 16 languages recognized by the Indian Constitution?
http://indiaimage.nic.in/languages.htm [indiaimage.nic.in]

Re:I'm screwed? (1)

alphakappa (687189) | more than 9 years ago | (#12901871)

"Now I need to learn Indian as well."

You also need to learn the fact that there is no language called 'Indian'. Sorry you pick on you, but one should know a little more about the rest of the world.. especially about a 1-billion strong part of the world.
(India has over 15 official languages including Hindi and English. Almost every state speaks a different language, but English is generally understood throughout India, while Hindi is generally understood throghout the Northern half of India.)

The problem ... (4, Insightful)

B3ryllium (571199) | more than 9 years ago | (#12901692)

The problem with outsourcing is that eventually the cheap work gets more expensive, then it becomes too much of a burden and things have to shift again ...

So, gradually, the corporations will pick random underdeveloped countries and beef them up to a point where the workers are too expensive, then they'll move on - until there are no underdeveloped countries left, just bloated overdeveloped cesspools full of unemployed engineers and white collars.

Re:The problem ... (2, Insightful)

aralin (107264) | more than 9 years ago | (#12901752)

By the time they go full circle, the countries where they came from will be underdeveloped and so they can go on :)

Uh, mod? (1)

richdun (672214) | more than 9 years ago | (#12901926)

I don't see how that was funny, more an interesting or insightful.

If they say... (1)

bpuli (654182) | more than 9 years ago | (#12901703)

labor arbitrage is not why they are doing it, you can be damn sure that's the primary reason they are doing it.
I am not sure many people realy believe the hype about a lack of availability of skilled labor in the US (and now maybe even Europe).

NOT a job cut (1, Insightful)

AvitarX (172628) | more than 9 years ago | (#12901713)

How is adding 1,000 jobs cutting jobs?

Do the Indians not count because they are brown?

IBM is adding to its workforce and yet is still critisized.

It's WHERE they're cutting them... (1)

Svartalf (2997) | more than 9 years ago | (#12901740)

...and then adding them back that is the problem.

Re:It's WHERE they're cutting them... (1)

Adambomb (118938) | more than 9 years ago | (#12901902)

You mean cutting them from the cranky overpaid consistently striking europeans and bringing them to the expanding massive market of the Indus? THOSE BASTARDS, WHAT ARE THEY THINKING.

Unions need to face up to the fact that just because they have a union doesnt mean they're ENTITLED TO MORE AND MORE EVERY FUCKING YEAR. If they focused more on making sure their member labour force was GLOBALLY COMPETITIVE than the usual GIVE US MORE DAMNIT they wouldnt have this problem.

Suck it up, they brought it on themselves.

Re:NOT a job cut (0)

Anonymous Coward | more than 9 years ago | (#12901790)

Why do you always think about things in relation to skin color?

Racists like you are the reason I am no longer a conservative.

IBM is only doing what makes sense (2, Insightful)

AtomicX (616545) | more than 9 years ago | (#12901717)

'if other cost cutting mechanisms could achieve the same effect without cutting so may jobs.'"

Probably not. For someone like IBM, labour is undoubtedly their biggest cost. If they can get equally good work from Indian programmers for a third of the cost, then I see every reason for them to do that.

Of course it is hard on the staff, but this is only going to happen more and more as time goes on, and increased union activity is only going to encourage large firms to outsource work.

The only way for IT workers in western countries to survive is to gain additional skills which workers in other countries lack.

Re:IBM is only doing what makes sense (1)

Mr. Ghost (674666) | more than 9 years ago | (#12901838)

It wasn't too long ago (maybe a month) that IBM said their were not enough skilled developers in the US and therefore they have to get more in school or move jobs offshore.

Well I know where they can get about 6,500 skilled developers (assuming half US and half EU)

I don't think they care (1)

xintegerx (557455) | more than 9 years ago | (#12901851)

I don't think it's true to say that IBM "can get equally good work from Indian programmers." I don't think lack of quality American employees is what has caused them to switch, at all.[1] This is the part that is responsible: "for a third of the cost."

In fact, economically, it is quite viable for any company to at least test the waters with offshoring. Every single company. The simple reason is that if it doesn't work out, they can always rehire back in the United States. So, for the companies who offshore, it's a win-win. That's what you call business logic.

Businesses know that there is a good chance the Indian workers will actually be much worse than the United States workers. However, they know that at 1/3rd the cost, they are willing to take their chances with it for a year, just in case they are actually able to get 14,000 good employees.

[1] Similarly, when H1B's were coming to the US, the reason again was solely for the cost savings--not because there weren't equally good employees available in the United States.

Re:IBM is only doing what makes sense (1)

jtogel (840879) | more than 9 years ago | (#12901924)

The only way for IT workers in western countries to survive is to gain additional skills which workers in other countries lack.

Alternatively, we could just move to India. While developers' paychecks over there are certainly lower than here, they are usually worth more, compared to the overall cost of living in the country. I, for one, wouldn't mind moving abroad to do equally stimulating work for relatively more money, and at the same time escape the bitter cold of nothern Europe.

That time of month (0)

Anonymous Coward | more than 9 years ago | (#12901718)

Monday: We hate IBM
Tuesday: We love IBM
Wednesday: We hate IBM
Thursday: We love IBM
Friday: We hate IBM

Off-Shoring (3, Insightful)

ndansmith (582590) | more than 9 years ago | (#12901721)

Is it really immoral to send jobs overseas? Why do people in Europe and US deserve the jobs more than people in India? How do these reactions to off-shoring fit into our new global economy?

[I am not saying anything either way.]

Re:Off-Shoring (1)

grungebox (578982) | more than 9 years ago | (#12901797)

This reminds of something a friend of mine once said to me: "The global economy is a great thing until you feel it locally."

Re:Off-Shoring (1)

theantipop (803016) | more than 9 years ago | (#12901852)

I'm all for a high standard of living in India and elsewhere, but when my livelihood (or future livelihood in my case) is being threatened, do you expect me to sit here and cheer for the global economy? I expect American companies to keep most jobs in America. If that fails to happen, our legs will be chopped off where we stand.

Re:Off-Shoring (1)

ndansmith (582590) | more than 9 years ago | (#12901921)

Well rather than letting our legs "get chopped off where we stand," we should find something new (besides IBM jobs) to offer in the global marketplace. I think that in business, if something doesn't go your way, you shouldn't complain about it. You adapt and profit some other way.

Re:Off-Shoring (0)

Anonymous Coward | more than 9 years ago | (#12901922)

Sending jobs overseas works as long as the loss of income impacts the customer base. It's harder to send THAT overseas...

Someone submit this... (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#12901725)

Someone please submit this story [foxnews.com]

It's killer Slashdot material but they rejected it after ten seconds of me submitting it. Maybe my blurb wasn't well written enough.

A job is NOT a right. It is a PRIVILEGE (0)

Anonymous Coward | more than 9 years ago | (#12901728)

A job is not your property. It is the property of the company you work for. The company can take it from you at any time for any reason.

The company can do this because you signed a contract stating that your employment is "at will" and that your employment can be terminated at any time.

You don't like this? Don't work for the company.

Blame yourself for signing the contract, not the Indian workers.

Remember, it is YOUR fault for even thinking that your job is secure.

Re:A job is NOT a right. It is a PRIVILEGE (0)

Anonymous Coward | more than 9 years ago | (#12901855)

Whoa! That's what I call slave mentality. Your corporate oveloards must be proud about you.

Obligatory South Park Quote (2, Funny)

PhotoBoy (684898) | more than 9 years ago | (#12901731)

1) Outsource everything except the board members to India
2) ?
3) Profit!

Re:Obligatory South Park Quote (1)

Winterblink (575267) | more than 9 years ago | (#12901895)

Oddly, in this case there is no ? step.

Its the Chinese Wall Manuever (5, Insightful)

0kComputer (872064) | more than 9 years ago | (#12901744)

Individual companies can't get away with shipping jobs to India due to the offshoring stigma, so what do they do? They hire consulting firms like IBM who basically do the dirty work for them. Problem solved; good cheap labor at a fraction of the cost without it being a PR nightmare because technically the company isn't offshoring. I've seen this happening more and more. Kind of scary.

Ford is cutting too (1)

killeena (794394) | more than 9 years ago | (#12901746)

My job at Ford just got sent to India as well. I know it is easier said than done, but I think the thing to try to do nowadays is to steer away from jobs at large corporations. Maybe I am wrong, but I haven't heard of many small companies sending their jobs to India.

Even the tinies offshore (2, Insightful)

Tangurena (576827) | more than 9 years ago | (#12901831)

Our small (under 10 employee) company just offshored a job for one of our clients. All of our clients had been beating us up over offshoring work, because it is fashionable. So we spent more time specking the work and administering it than if we did the work ourselves. But we had to offshore the work because offshoring is this decade's fashion, our generations bell-bottom jeans.

They have to do this to stay in business (0)

Anonymous Coward | more than 9 years ago | (#12901756)

IBM is losing its global IT services market share to companies like Wipro and Infosys. These companies have an advantage of cheaper labour force. If IBM needs to stay in business, they will have to use the Indian labour force to compete or else they will be soon be out of business or bought over by Infosys.

Bit shifting... (0)

Anonymous Coward | more than 9 years ago | (#12901758)

But the real question is, is this a logical shift or an arithmetic shift?
*ducks*

Article Text (1)

Winckle (870180) | more than 9 years ago | (#12901762)

By STEVE LOHR
Published: June 24, 2005

Even as it proceeds with layoffs of up to 13,000 workers in Europe and the United States, I.B.M. plans to increase its payroll in India this year by more than 14,000 workers, according to an internal company document.

Those numbers are telling evidence of the continuing globalization of work and the migration of some skilled jobs to low-wage countries like India. And I.B.M., the world's largest information technology company, is something of a corporate laboratory that highlights the trend. Its actions inform the worries and policy debate that surround the rise of a global labor force in science, engineering and other fields that require advanced education.
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I.B.M. Employees

To critics, I.B.M. is a leading example of the corporate strategy of shopping the globe for the cheapest labor in a single-minded pursuit of profits, to the detriment of wages, benefits and job security here and in other developed countries. The company announced last month that it would cut 10,000 to 13,000 jobs, about a quarter of them in the United States and the bulk of the rest in Western Europe.

"I.B.M. is really pushing this offshore outsourcing to relentlessly cut costs and to export skilled jobs abroad," said Marcus Courtney, president of the Washington Alliance of Technology Workers, or WashTech, a group that seeks to unionize such workers. "The winners are the richest corporations in the world, and American workers lose."

WashTech, based in Washington State, gave the I.B.M. document on Indian employment to The New York Times. It is labeled "I.B.M. Confidential" and dated April 2005. An I.B.M. employee concerned about the shifting of jobs abroad provided the document to WashTech.

I.B.M. declined to comment on the document or the numbers in it, other than to say that there are many documents, charts and projections generated within the company.

But in an interview, Robert W. Moffat, an I.B.M. senior vice president, explained that the buildup in India was attributable to surging demand for technology services in the thriving Indian economy and the opportunity to tap the many skilled Indian software engineers to work on projects around the world.

Lower trade barriers and cheaper telecommunications and computing ability help allow a distant labor force to work on technology projects, he said.

Mr. Moffat said I.B.M. was making the shift from a classic multinational corporation with separate businesses in many different countries to a truly worldwide company whose work can be divided and parceled out to the most efficient locations.

Cost is part of the calculation, Mr. Moffat noted, but typically not the most important consideration. "People who say this is simply labor arbitrage don't get it," he said. "It's mostly about skills."

And Mr. Moffat said that I.B.M. was hiring people around the world, including many in the United States, in new businesses that the company has marked for growth, even as it trims elsewhere. The company's overall employment in the United States has held steady for the last few years, at about 130,000.

To foster growth, I.B.M. is increasingly trying to help its client companies use information technology rather than just selling them the hardware and software. So I.B.M. researchers and programmers are more and more being put to work for customers, redesigning and automating tasks like procurement, accounting and customer service.

Yet those advanced services projects will be broken into pieces, with different experts in different countries handling a slice. This emerging globalization of operations, Mr. Moffat noted, does lead to a global labor market in certain fields. "You are no longer competing just with the guy down the street, but also with people around the world," he said.

Such competition, however, can become particularly harsh for workers in the West when they are competing against well-educated workers in low-wage countries like India. An experienced software programmer in the United States earning $75,000 a year can often be replaced by an Indian programmer who earns $15,000 or so.

Most economic studies, including one last week by the McKinsey Global Institute, a research group, have concluded that the offshore outsourcing of work will not have a huge effect on American jobs as a whole.

But looking at job numbers alone, said Joseph E. Stiglitz, a Nobel Prize-winning economist and a professor at Columbia University, understates the potential problem. "What worries me is that it could have an enormous effect on wages, and that could have a wrenching impact on society," said Professor Stiglitz, a former chief economist of the World Bank.

The fact that globalization anxiety about jobs and wages does not extend to executive ranks has stirred resentment among workers. "Maybe the shareholders should look offshore for competitive executives who would collect less pay and fewer benefits," said Lee Conrad, national coordinator of the Alliance@IBM, a union-affiliated group that has 6,500 dues-paying members at I.B.M. "In all this talk of global competitiveness, the burden all falls on the workers."

Education and retraining, most experts agree, is a major part of the answer for helping skilled workers adjust and find new jobs to replace those lost to global competition. For its part, I.B.M. says it spends more than $700 million on training its employees for new jobs within the company, and for those laid off it offers severance packages that include career counseling and reimbursement for retraining.

Even some champions of globalization say the corporate winners should do more to ease the transition of the losers. "The wealth creation clearly has some fallout, and there is a responsibility for it," said Diana Farrell, director of the McKinsey Global Institute.

By one calculation, the cost of softening the blow might not be all that high. For every dollar invested offshore, American companies save 58 cents, McKinsey estimates. And 4 or 5 percent of those savings could pay for a theoretical wage insurance program that would cover 70 percent of the income lost between an old job and a new one, as well as subsidized health care coverage, McKinsey said.

IBM Could Just Be the World's Fattest Company (1)

pestilence669 (823950) | more than 9 years ago | (#12901763)

I once had IBM e-Services come out for a visit. They were deploying some test equipment (RS/6000) servers and WebSphere for us.

They had a guy that did nothing but open boxes. There were four training staff persons for all two of us that needed training. We had three account reps.

IBM has some talented workers, but simply too many. I applaud their staff cuts... I disapprove of replacing talented staff with cheaper labor.

Hell, dropping OS/2 legacy support could probably save them a few million... or any of the other several hundred divisions operating at a loss.

A risk to the security of the US and Europe? (2, Interesting)

CyricZ (887944) | more than 9 years ago | (#12901768)

Does such a change pose a risk to the security of the United States and Europe? Indeed, the government and military have always been a large consumer of IBM's products. That is understandable, of course, considering the extreme reliability, durability, stability and ultimate engineering that IBM systems represent. But with the design and implementation of these systems being sent over to non-Western countries, there are always security fears. Will backdoors be inserted into IBM's software that will then be sold to Western powers? It's a very real possibility.

Good guy?! (1)

jwsd (718491) | more than 9 years ago | (#12901770)

But IBM is the good guy, it supports open source... Or is it just using open source as a marketing tool? Who cares, as long as it gives the open source people some purpose in life...

Re:Good guy?! (1)

RingDev (879105) | more than 9 years ago | (#12901896)

Yup, that way they can get bulk coding for $1.50/hr out of India, and get free peer review and development out of the west. -Rick

Re:Good guy?! (1)

lcampagn (842601) | more than 9 years ago | (#12901906)

Supporting open source doesn't make anybody automatically the "good guy." By supporting open source, IBM is acting in their own self interest; precisely the same reason they are outsourcing to less expensive labor markets.

How else are they gonna make game console chips? (2, Interesting)

Vandil X (636030) | more than 9 years ago | (#12901776)

The PS3 and Xbox 360 are going to sell in droves worldwide. That's a lot of PowerPC chipsets that need to be manufactured cheaply, quickly, and consistently by IBM.

While I don't agree with off-shoring, consider that many of the jobs that get off-shored are jobs that Americans either want too much pay/benefits for, or are jobs that are "below" them due to the scheduled_hours/tasks.

Foreign nationals in developing countries can easily snatch these jobs up for much less pay/benefits and are actually happy/proud to have the job.

The real problem is unions... (0)

Anonymous Coward | more than 9 years ago | (#12901781)

The problem with things like this is unions. Unions would be great if they actually existed for their original purpose - worker protection. Instead, they exist now for *job* protection, which is a fallacy. There is no longer any job loyalty (nor should there be company loyalty), and the fact that unions don't yet get that means there will be more stories just like this one in the future.

The unions need to stop making sure that one job that could be done by two people for $15 an hour is done by one for $25 an hour. Instead of finding a way to get that guy $20 an hour doing something else, and employing two more people for $15 an hour, they stubbornly insist that the jobs that exist now must be the ones that exist in the future, too, which is silly given how quickly things change. (In essence, they've cost three people jobs - the guy who can't get the $25 an hour any more but who could get $20, and the two people who could have gotten the $15!)

Don't even get me started on "specialisation" where people can't plug in a computer because they need someone from the electrical union to do it for them! Talk about a crock, it's the biggest forced job existence ploy ever, and won't stand up over the long term.

Unions also insist on healthcare benefits that are way out of the norms (see GM). Their struggle to preserve jobs, instead of protect workers, is doomed to fail, and they should learn to realise it.

Another score for capitalism!!!! (0)

Anonymous Coward | more than 9 years ago | (#12901783)

Another score for capitalism!!!! If you want Socialism, go move to North Korea or China where the government thinks it knows best.

Capitalism is what made the USA the most powerful and free nation in the world....

America and Europe in the same boat? (1)

egriebel (177065) | more than 9 years ago | (#12901787)

Sweet, it's nice to know that the US is not the only country to fall victim to off-whoring(tm)!!

It's an Open Source donation to themselves! (2, Funny)

lux55 (532736) | more than 9 years ago | (#12901808)

Really, this just means 14,000 more EU and US programmers can now work on IBM's Open Source initiatives without having to be on payroll. Don't programmers seem to prefer that anyway?

Re:It's an Open Source donation to themselves! (1)

lux55 (532736) | more than 9 years ago | (#12901845)

Where did my sarcasm tags go?! Anyway, here's how that was supposed to read:

Really, this just means 14,000 more EU and US programmers can now work on IBM's Open Source initiatives without having to be on payroll. <sarcasm>Don't programmers seem to prefer that anyway?</sarcasm>

in other news... (1)

FFON (266696) | more than 9 years ago | (#12901849)

14,000 users of IBMs services had acount their details sold by employees of an Indian call center.

Fake Free Trade (4, Interesting)

reporter (666905) | more than 9 years ago | (#12901858)

When a (relatively) free market like the USA interacts with a (relatively) non-free market like India by the trading of goods and services (including labor), the free market becomes non-free. The government regulations and corruption that damages the Indian market now affects the American market. The normal market forces in the USA are now influenced/destroyed by Indian government policies that have obliterated the economic opportunities and standard of living in India.

Similar arguments apply to illegal aliens from Mexico. Under the aegis of the North American Free Trade Agreement (NAFTA), illegal aliens flood into the USA and have essentially destroyed the wages in the market for unskilled labor. The normal market forces in the USA are now influenced/destroyed by Mexican government policies that have obliterated the economic opportunities and standard of living in Mexico. Without illegal aliens, the Americans working as unskilled labor would enjoy a sudden and dramatic boost in their wages, enabling them to actually buy medical insurance.

When American politicians tout free trade and claim that the American market remains a free market, they completely ignore the non-free market which is interacting with our free market and which is destroying the normal market forces in a (our) free market. The rub is that no one seems to care.

Free trade advances free markets in only one scenario: (relatively) free markets like the USA interact with other (relatively) free markets like Eastern/Western Europe, Canada, and Japan. To maintain genuine free trade, we should close our markets (including the market for services like labor) to India, China, and their ilk until those nations establish free markets. We lose nothing by championing genuine free trade.

Re:Fake Free Trade (1)

tommck (69750) | more than 9 years ago | (#12901904)

Without illegal aliens, the Americans working as unskilled labor would enjoy a sudden and dramatic boost in their wages, enabling them to actually buy medical insurance.

I'm no economist, but would this not also then make it more expensive to build said "widgets" (whatever is producted/affected by unskilled labor). Thus, when Americans want to buy those widgets, they become more expensive. This would, in turn, raise the cost of living in the US to balance out the effects of the increase in wages, right?

Clarity (1)

ThoreauHD (213527) | more than 9 years ago | (#12901905)

I just want to say that I agree with you. I'd also like to say that it's nice to meet a person with a decent I.Q. and clue. No, I'm not coming on to you(I'm a guy). I'm being sincere. Good post.

America and Europe: Eat your pie and shut up! (0)

Anonymous Coward | more than 9 years ago | (#12901872)

For all of us Americans -- well, we have to live the mantra we've preached (and toppled governments for): The Free Market Rules. And please read today's NYTimes editorial: http://www.nytimes.com/2005/06/24/opinion/24friedm an.html [nytimes.com] For the Europeans: Unless you break out of your coddled livestyles of state-sponsored laziness, there's little you have to complain about. Oh, and you'll have to have MASSIVE immigration to support your hopelessly unbalanced worker-to-pensioner ration, so let's all laugh while you import Indians and Chinese to work in your countries...

US decline (1)

cats-paw (34890) | more than 9 years ago | (#12901930)

Say what you want but this is continued evidence of us decline. Why don't people get the concept that just because wages go up in the rest of the world, they will in the US also. It is clearly not happening. The world economy will "average" out. This process means an inevitable fall in standard of living in the US, Europe and probably Japan also.

In about a generation or so, things will _probably_ even out, but in the meantime the US if f*cked. In fact, in the long term the US may be f*cked also. The US as a market will be much smaller than India-Asia, and so employment and mfg will be centered there. It will be interesting watching the US devolve into a 3rd world economic classification.

There is no such thing as free trade.
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