NYT: Cutting Here (US, Europe), but Hiring Over There (India)

[DeepModem Mom]

Cutting Here, but Hiring Over There
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.

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....


http://www.nytimes.com/2005/06/24/technology/24blue.html

[lovuian]

1. Companies Greed are going to put the US in a Depression!!!

and the worker who would buy your IBM is going to be out of a job and poor ....... these companies are shooting themselves in the foot and don't know it!!!

Capitalism doesn't work here!!!

[Joebert]

3. This makes sense for IBM

They do not sell to end-users.

They sell to big business who can afford big servers, and big consulting.

Their PC/notebook business was already sold to Lenovo of China, so they can only benefit from cheap labor.

Dell, HP, Gateway, Apple. These guys need to be careful. They sell to you and me. If they send the jobs out, in the long term, it will hurt them.

Now, I do wonder if some of these companies haven't decided that they can only sell so many PCs here, but there are untapped customers elsewhere. Give them jobs, let them accumulate some money, and they'll start buying.

USA = 280M
India = 1000M
China = 1300M

It would make sense to get popular elsewhere.

[modrepub]

8. Is it worth it?

My wife's company outsourced some code to India. In short it came back and her group had to drop everything and fix it so it would work properly. I'm not dissing work done by Indian coders but how much money can a company make if this is the norm?

[bitchkitty]

18. It is not the norm, but

it's still a problem - it's my opinion that we need a global minimum wage for such work.

[opusprime]

29. Go Flyers...

Indian labor skills are still subpar to the American labor pool. But it's catching up fast since college students in the US are no longer majoring in computer science.

Innovation is still being done in the states. But it wont be long before those jobs are shipped overseas as well.

Hopefully, this innovator (SP?) will be retired by then.

Please God, give me hockey again, and make Robert Esche the NHL top goalie.

[modrepub]

39. Are they?

I'm not sure what's up with this. From what I've heard there are consultants who act as middle men for different outsourcing outfits matching coding work up with available pools of people in different countries. Are they overselling their resources at times? Probably, but I'm also sure there are some good coders in other countries trained in US schools and lacking visas to stay here and work. When I hear of companies outsourcing work I wonder if they know what they are doing or just looking at the price and buying on the cheap only to have someone else clean it up later.

Eshe???!! Can you say Nittymaki??

[Joebert]

45. So many Philly fans.

My logo isn't a Flyers logo in revolt (and revulsion) over the NHL status.

But I am a Flyer fan, born in Philly.

I haven't seen much of Nitty, but hear good things. Esche is the man though.


And on topic, most of the problems that people have with code sent, and returned, are the company's fault. One thing outsourcing has revealed is how badly organized some companies are. Clear communication is needed, but assumptions are made on both sides.

I went through a 4 hour long class on how to better work with Indians, and it focused on these kinds of things. Listening to big program managers shocked at how things went, and having the instructor politely destroy them by saying things like "Did you ask X, or did they ever say something like Y"

India/China/and others will all improve as the learn the way we do business.

[acmejack]

41. Dell has outsourced everyone already!

Ex Dell person, first hand experience. Dell outsourced so many jobs in central Texas that they aren't even listed among the area businesses in the business section of the local paper.

[Kittycat]

2. The US is the largest consumer economy...

If they continue to move our jobs overseas, in search of low-wages/higher profits... Eventually this will backfire. If there are no jobs, there are no consumers!

[nine30]

14. No no no...

There ARE consumers, only abroad. The CEOs live in America, but manufacture abroad, sell abroad, and buy from abroad.
So they are fine.

[davekriss]

21. Except...

...that, by outsourcing jobs to the 2 billion Indians and Chinese, they create demand there. And by the multiplier effect, demand has the potential to exceed what has been generated in the mature U.S. market. Transnationals are beholden to no nation state and they will still appropriate profit for the global uber-capitalist class. So bye-bye American middle class. Watch the rise of rentier class and feudal capitalism, the demise of liberty. At least, that seems to be the direction we're trending.

Posts lately focus on offshoring IT work (which has followed manufacturing overseas), but note every transnational boardroom is today talking Business Process Outsourcing (BPO), which means shipping those accounting, legal, procurement, etc. etc. jobs overseas as well. The only jobs safe are executive management, which for the most part will be reserved for the children of executives, and those that require close continuous proximity to the buyer -- e.g., hairdressing, dentists, lawn-care services.

We have a bleak future ahead...

[Vincardog]

26. They want to send the US back to the dark ages.

Then no one will care what "King george" does.

[barb162]

31. doesn't matter. Some other country will take over as

largest consumer, like India or China. The goal of the corporation is to enrich itself. In other words, the policy won't backfire on the corporations

[daleo]

4. The race is on

Hurry, hurry, I think we can get to the bottom first. We win!

[Iowa]

5. OK, here's what the Dem pols should do.

Wrap this issue in the flag. I'll even provide the script for them...

"Your flag-burning amendment to the constitution sounds like it was written by a bunch of hand-wringing schoolgirls. It needs to be totally reworked by real men with big dongs, not pudgy little fat-boys like Karl Rove. This should be about AMERICA and PATRIOTISM! We're not gonna sign on to a sissified amendment like this! You weenies need to put some real meat on this by including the death penalty for any CEO who moves AMERICAN jobs overseas. Now get your pretty faces and your soft hands the fuck outta here before we bitch-slap you! What a bunch of pussies!"

[DeepModem Mom]

6. That, Iowa, is an interesting idea, and somehow Jack Nicholson...

came to mind when I read your "script" --

[deacon2]

16. Exactly, Iowa

This is the language of the GOP. Use it against them. I think the death penalty for CEOs construct is especially on the mark "symbolically." Although that's really no stretch for me - living in SoCal, I've advocated summary execution for traffic impeders for years!

It should be clear to everyone that it's long past time to get real with these bastards. Hit hard and hit often. This mollification and coddling is for sissies. That's something that will never play in America. Ever. It's time to realize that it's okay to get angry when people piss on everything you hold dear and ruin your life. This isn't a "self-esteem exercise" at some overpriced Beverly Hills pre-school. This is politics in the modern debacle that is our nation. Play to win or get the fuck out of the way.

[DeepModem Mom]

17. Yep -- I wish Dems on TV, and our talking-head reps...

especially would heed your advice. TV used to be a "cool" medium, but I think in the political realm, thanks to Hannity, O'Reilly, Novak, and even that attack-dog-for-Republicans Russert, it is no more.

[earth mom]

32. You said it!

I am so sick of the tip toeing around! We need to get rid of any dems in congress that aren't like Conyers, Boxer and Dean! I'm furious with how so much is done to benefit the corporate Mo Fos while crumbs are thrown to the rest of us-who are the MAJORITY I might add! Dems in congress are just as responsible as rethugs for killing off the middle class because they have done little if anything to stop it! Look how they screwed us with the bankruptcy bill! :grr:

[bpilgrim]

7. if only we had the proper SKILLS all would be set right

that is the current LAME excuse from the elite... but they NEVER say what the 'proper' skills are :puke:

i know plenty of high-tech folk who can't find a job and those are the jobs going over there :argh:

it is simply a race to the BOTTOM.

peace

[AzDar]

9. Veterans, where's your health care funding? Shipped overseas in a

duffel bag. Mothers, where's your children's education funding? Why, it's been shipped overseas in a duffel bag. American workers, where are your jobs? Yep, shipped overseas in a duffel bag. And all We get in return, are body bags (in non-photographed, flag-draped coffins, of course). Doesn't seem right...does it?


On edit: ...Just realized I have the makings of a killer Folk song here...lol

[Daphne08]

27. No, it doesn't seem right. It seems patently un-American to me!

:mad:

[Tommymac]

10. Outsource the Executives too...

Loved this quote in the article.

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."

:yourock:

[girl gone mad]

30. I think at some point it may happen.

The difference in salary between an American executive and an Indian executive is much greater than the difference in wages between workers from the two countries. American executives are extremely expensive.

Also, as more of the work is being moved overseas, it becomes necessary to have managers and executives who have more familiarity with the country. Americans just don't get the kind of exposure to Indian culture that Indians get to American culture. It would be easier to find an Indian who could work well in both environments.

[earth mom]

38. Sounds like you are justifying it. How will you feel when it's YOUR job?

[Tommymac]

43. It was my job in January...I was a victim of IT outsourcing.

[sabra]

11. As IBM cuts in U.S., it hires in India (14,000 Indian workers )

<<SNIP>>
http://money.cnn.com/2005/06/24/news/fortune500/ibm_india/index.htm?cnn=yes

As IBM cuts in U.S., it hires in India

Report: Big Blue plans to bring on 14,000 Indian workers as it proceeds with U.S., European layoffs.
June 24, 2005: 7:35 AM EDT

NEW YORK (CNN/Money) - IBM is planning to hire more than 14,000 new workers in India this year, even as the company proceeds with layoffs of up to 13,000 workers in Europe and the United States, the New York Times reported Friday, citing an internal company document.

IBM (Research) Senior Vice President Robert Moffat, in an interview with the newspaper, said the move is not entirely about cost saving.

"People who say this is simply labor arbitrage don't get it. It's mostly about skills," Moffat was quoted as saying.

The buildup in IBM's labor force in India, Moffat told the Times, was attributable to surging demand for technology services in a 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 in the report.


<</SNIP>>

[justinsb]

12. Yep

According to an article I read about a year ago..in Wired I think - the average coder in North America makes about 80 thousand a year. The average coder in India (with the same level of education as his North American counterpart) makes about 13 thousand but with the currency conversion a 13 thousand US income, in India puts them in about the top 20% of income earners in that country. So, as far as the Indian coders are concerned it's not a sweatshop - far from it, they feel highly rewarded and very comfortable.

[CATagious]

13. I work at IBM...

and the jobs in my department are slowly moving to Brazil and India. I'm hoping I can hang on for another year... I've returned to school and hope to get a year closer to a degree before becoming the victim of outsourcing!

[Mother Jones]

20. So do I....same thing here

in Canada.

And I know for a fact that, as long as the stock doesn't bounce back up, we will continue to see this pattern continue.


Real cause for concern among us middle-classers.

[DeepModem Mom]

23. Thanks for your inside view, Mother Jones. nt

[DeepModem Mom]

22. Thanks for an inside view, CAT -- and welcome to DU!

[davekriss]

24. A degree to do ... what?

Most everything you'd train for will also be offshored at some point. Opportunities for costly professional labor will shrink while the labor pool remains large. What long term effect will that have on compensation and benefits, on job security, on occupational safety regulations?

Meanwhile the Repugs tightened the screws on bankruptcy, are positioning to unravel further the safety net of Social Security, Medicaid, and Medicare, leaving the many to do ... what? Starve? Die of treatable diseases?

"Useless eaters" Kissinger was once heard to say; GHWB, though, valued the masses more highly, calling us "cannon fodder". (At least, I've heard these phrases attributed to each -- I don't have links.)

[Amonester]

47. I heard King George II has plans to send civilians

into the foreign countries he intends to invade next so, his Court of Have-Mores can continue to increase their net values by double digits (if not by triple, or quadruple, or more...).

So basicaly, it seems that's the plan: massive lay offs = can't go bankrupt? Here: there's a "new american century" draft look alike "program" that will send you and your family overseas without armor, boots, and guns... just your camera (to take pictures of the "newly recruited terrorist" moments before he attacked you????)

That's the theocracy dominionists' "untold" plan: send (unemployed, thus starving) civilians to foreign "pre-emptive" conflicts... so the already obcenely riches can continue to get richer...

:grr:

[Coexist]

15. Fine, then get them off the Corporate Welfare program

if they are going to do shit like this. Why should we pay for them to cut jobs here. NOT RIGHT. This is an old link - anyone know if this has changed?

http://www.ctj.org/html/corp0402.htm
<snip>
"IBM reported $5.7 billion in U.S. profits in 2000, but paid only 3.4 percent of that in federal income taxes. In 1997, IBM reported $3.1 billion in U.S. profits, and instead of paying taxes, got an outright tax rebate. Over the past five years, IBM enjoyed a total of $4.7 billion in corporate tax welfare."

[Supersedeas]

19. the President of U.S. outsourcing is in the WH -- 51% salute yourselves

[justinsb]

25. I don't know how you compete with that

An indian programmer with a Computer Science degree earns 13k a year and that puts them in the middle to upper middle class in india because of the exchange rate. It's not a sweatshop as far as they're concerned.

[Vincardog]

28. It would work out better if his shit worked. From my experience

the code coming out of INDIA doesn't. We (American Workers) Wiill never be able to compete with $1 an hour labor especially when our work must work and theirs does not.

[Lori Price CLG]

33. IBM shifts 14,000 jobs to India

IBM shifts 14,000 jobs to India

Friday 24 June 2005, 10:08

Coincidence?

An internal IBM document suggests that the firm will hire 14,000 workers in India this year, a number that's so close to the 13,000 people it will lay off in Europe and the US that sheer coincidence seems unlikely, even to the far from cynical.

<snip>

[AlCzervik]

34. no and my sister is one of the 13,000 that will be losing her job

[eleonora]

35. Are you *really* surprised?

You know where we're headed. And what will happen once wages in India start going up too??

[AlCzervik]

36. it's already happening-the Czech republic and areas close by are becoming

the new cheaper labor market.

[It was not a pretzel]

42. Except for

the fact that campanies who moved from western Europe to CZ are already threatening Czech and Hungarian workers that they need to take wage cuts or they will move to Romania and other even cheaper places.

[Lori Price CLG]

37. NYT version:

Here is the NYT version:
Cutting Here, but Hiring Over There

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.

<snip>

Lori Price

[jmatthan]

40. Remember IBM was booted out of India

in the 70's because they had a policy which was counter to Indian interests. The company formed by ex-employees is a 2 billion dollar enterprise today.

IBM had no option but to go back to India in a way that fitted India's interests (not just IBM's). And they are increasing their presence as all the big players who are their competitors are there and if IBM is not there, it will be their loss.

Europe and the US will have to rethink their entire national policies to keep there corporates within their countries. That means a complete rethink of education, energy policies, labour policies, resource evaluation. Such stupid policies as the "war on terror", No Child Left Behind which leaves all middle and poor children far far behind, stupid and unnecessary wars which they will continue to lose, are not going to make them competitive and keep jobs except in creating killing machines within their borders.

Jacob Matthan
http://MoveTheUN.blogspot.com
Oulu, Finland

[idlisambar]

44. which company is that?

what's the $2 billion company you are talking about?

[jmatthan]

46. HCL

eom