IBM Shifts 14,000 Jobs to India 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.'"
A risk to the security of the US and Europe? (Score:3, Interesting)
How else are they gonna make game console chips? (Score:3, Interesting)
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.
Fake Free Trade (Score:5, Interesting)
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:That's the free market at work. (Score:4, Interesting)
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....
Re:MOD PARENT UP (Score:5, Interesting)
Union too late... (Score:3, Interesting)
I understand why sometimes the labour and capital components of business have to have an adversarial relationship, but I also know that they need to have a co-operative relationship as well.
It's as if the union had these great ideas for saving IBM money, but kept them quiet until IBM started to cut jobs, and they said, "Wait wait wait...".
In the original black-and-blue article, the union made the point that IBM's "first quarter profit for 2005 was $1.4 billion, and $9 billion for the whole of 2004". Unfortunately, a corporation has a legal imperitive to make as much money as possible for the shareholders. The problem is not IBM, but rather corporations in general.
Some of the more interesting books on the subject are,
Myth of the Good Corporate Citizen [indigo.ca]
The Corporation (the book that the documentary was based on) [indigo.ca]
Confessions Of an Economic Hit Man [indigo.ca]
Re:Can you give some tangible examples? (Score:5, Interesting)
The biggest difference I've ever noticed is mostly cultural.
It seems that Americans are more used to questioning and saying things like "are you sure you really want to do it this way??", whereas Indian programmers just seem to do what they're told, regardless of whether it makes sense.
For example, my wife works at a large financial firm as a project manager. They had to stop giving new development to an Indian company they were working with because the work turned out to be barely functional. This was mostly due to the specs not being complete. She said she almost never got questions about the requirements and just received a bad product at the end. This same company was exceptional at porting older applications to newer technologies and they still do that today. They just don't get new work.
Granted, the root cause of the issue was bad requirements, but American designers/developers would have balked at it and questioned it more, resulting in a better product.
(NOTE: Some of this hesitation is probably due to fixed-price negotiations and time limits along with time zone differences and the difficulty of back-and-forth requirements gathering with people in a different part of the world. YMMV)
Re:Message sent, but will it be received? (Score:3, Interesting)
Re:Can you give some tangible examples? (Score:5, Interesting)
That is shit.
And here is an example of what happens if you outsource to there: Lucent spectacular VOIP failure. It was the market leader, it outsourced all of its software development on it to India around 1998 and it was no more in 6 months.
There is also the expensive ones. The ones which cost about as much Europeans and Americans. You once again get what you have bargained for. Worked with some of these and I have been about as happy as with any American or European subcontractor.
You should not really put all of them under the same label
Re:Can you give some tangible examples? (Score:4, Interesting)
I don't believe programmers in India are "worse" than programmers here. It's mostly a difference in communication and coding style.
I know a couple people from different companies that have had to work with contractors in India; sending pieces of a project back-and-forth electronically. The common theme I hear them talk about is the different in coding style and the like. That alone makes it a real p.i.t.a.
However, some have worked with firms that were just horrible (which could have easily happened if they went with a US firm).
One friend's company handed off a project they were working on in-house to a group in India because they were getting swamped with work. The contract stated that they'd own the code and what-not, which was a biggie since this was a project that was going to evolve in the coming years. While the product worked, the actual source was useless to them; they didn't follow the company's IT section's normal routine of documentation and there was a lot of spagetti code.
However, this sounds like an issue with a specific companies/contractors/etc and not with the country. The idea that some IT have that India is "sub-par" comes from stories of the occasional bad firm along with people's experience with the culture/language/algorithm barrier.
If they are laid off they can't buy anything!!!! (Score:1, Interesting)
People, if you want to see the future of the IT field in a world market look at manufacturing. How many products are made in the USA anymore? It does not bode well.
There are plenty of skilled people here in the USA. We have the best colleges, and some of the brightest people. If it is about saving money then why not set up operations in the midwest where housing and the cost of living are low? That would keep the jobs in American hands as well as re-vitalize the economies of the poorest states and counties in America.
Now THAT would benefit the workers.
Re:Morality of Offshoring (Score:3, Interesting)
Partial excerpt:
1. There is no such thing as a "free market."
2. The "middle class" is the creation of government intervention in the marketplace, and won't exist without it (as millions of Americans and Europeans are discovering).
The conservative belief in "free markets" is a bit like the Catholic Church's insistence that the Earth was at the center of the Solar System in the Twelfth Century. It's widely believed by those in power, those who challenge it are branded heretics and ridiculed, and it is wrong.
In actual fact, there is no such thing as a "free market." Markets are the creation of government.
Re:Message sent, but will it be received? (Score:2, Interesting)
Re:Fake Free Trade (Score:3, Interesting)
Let me enlighten you just a bit: Investigate the total construction materials of commonplace items such as shoes. Specifically, leather. The US requires very exact amount of it, from US markets alone. This, in the perspective of any other market, is protectionist and unfair. Now expand this one idea into hundreds of thousands of rules, from lumber to food, textiles, inks&dyes, metals, etc. And these rules exist for every market, not just the US.
The perceived "non-free" cronyism of India or Mexico may indeed not be the same as the US, but markets don't act uniformly across a country, and don't stop at borders. Markets are not tightly regulated anywhere, since they are by nature fluid and constantly reactive to many forces, only one of which is government oversight.
The workers that arrive from another country (state? neighborhood?) and take work for less wages are part of the market not outside of it. What you are observing is market globalism, where good and services are no longer held in check by geographic bondaries. Just like information. If you had to pay a "import tax" to read any web page not hosted in your direct neighborhood, would you be angry by it's subsequent removal and the loss of jobs that said tax funded?
Suffice it to say that there are 6.5 billion people in the world who have (mostly) a lower standard of living than you. If their manufacture/machine/coding output beats your per price, than it's time to raise the bar and do something else. Your job is just a step away from being done by a machine anyway, since that's what takes away jobs from those cheap industrial countries.
Re:Can you give some tangible examples? (Score:1, Interesting)
In India there are people who get paid well and people who get paid less, just like here. When a company decides to outsource, the idea behind it is to save money. Now, they have a choice to outsource to someone in India who gets paid well and someone who is willing to get paid less. This company decides that, if they're going to save money, they might as well just go with the guy who is willing to get paid less, and in turn is more likely to me less experienced. So, now they're left with a group of people who are less experienced with the previous employees, but at least they're saving money.
The company I worked for decided to do this before I started working there. Once I saw the software I realized how very poorly the code was written and when I confronted my manager about it he pretty much told me that it was because they sold the contract to the lowest bidder. Ironically enough, they aren't saving money since the software has been delayed for 8 months due to all the defects and is now costing them more than if they sold the contract to a worthy software development company.
Re:MOD PARENT UP (Score:2, Interesting)
Re:Can you give some tangible examples? (Score:3, Interesting)
Thomas Friedman on Europe vs India differences (Score:2, Interesting)
To quote Thomas Friedman "It is interesting because French voters are trying to preserve a 35-hour work week in a world where Indian engineers are ready to work a 35-hour day. Good luck. Voters in "old Europe" - France, Germany, the Netherlands and Italy - seem to be saying to their leaders: stop the world, we want to get off; while voters in India have been telling their leaders: stop the world and build us a stepstool, we want to get on.
I feel sorry for Western European blue collar workers. A world of benefits they have known for 50 years is coming apart, and their governments don't seem to have a strategy for coping. "
Re:Message sent, but will it be received? (Score:2, Interesting)
You're severely misinformed. The US has 0 weeks of paid vacation, and 0 weeks of statutory sick leave. Yes that's right, you can get a job here that has no vacation at all. It's up to the company to give you vacation, in fact in many companies it's part of the compensation bargaining process. Some individual states have their own labor laws which may grant more vacation or additional rights. California does have quite a few laws, especially involving maternity, although they are nothing compared to what I've heard of some EU countries.
I'd like to see a link to these statistics. While I would believe that if Spain in fact does have higher productivity, I'd only believe that it would be higher productivity per hour. Which does make sense. Personally I get the lions' share of my work done in the first 6 hours of any day. After that, productivity drops rapidly. I still get work done and am still productive up to about 12 hours. After that point I find working any longer to be counter productive.
Dan K
Re:There was a story when I worked at Microsoft (Score:3, Interesting)
Poeple keep repeating this "investment" mantra like they never had a thought of their own. Pushing money (stocks) around is not investment, it's speculation and it generates as much value as betting on horse races, which is zero.
Re:Adapt or Die (Score:3, Interesting)
We're approaching the point where the time a skill is economically viable is going to be less than the time it takes to learn it. How will we survive with less than a 50% working-to-education duty cycle?
It can be an "investment". (Score:3, Interesting)
Otherwise, you're 100% accurate. The "buy low, sell high" stock market mantra is pure speculation and speculation just moves the existing money around without creating anything of value.
http://www.bell.lib.umn.edu/Products/tulips.html [umn.edu]
What happens is lots of money goes to a few people who spend lavishly on extravagent luxuries. That money comes from the many losers in that game.
And that is the problem with the current "investments" in the stock market. It's great when you're the winner, but there are far more losers than winners. No one likes to look at what happens if you aren't one of the winners.
Re:Message sent, but will it be received? (Score:2, Interesting)
The concept of class is not well defined, and worthless.
I just want to increase my quality of life a little each year, and so far, with the exception of parts of the 1970's and parts of 2001, it is going fine for me. I don't care which "class" someone would like to say I am in.
But we're currently embroiled in a much larger conflict (the economic war combined with the war on terror)
I think that you are overly concerned about a couple of nuts with bombs, not to mention concerned about an economic regime which has a track record of bringing incredible increases in wealth to the US, as well as raising hundreds of millions of people in Asia out of absolute poverty (under $1 a day).
There is no emergency. The concept of emergency is most used to spread fear by priests or politicians to who seek power by hurting people or damaging the economy with regulations.
Re:MOD PARENT UP (Score:0, Interesting)
1. It is not "morally wrong" to put your _own_ country first, allies second, enemies last. All countries do this (some more cleverly than others). It is not only normal but smart. True, reliable human loyalty works naturally "from the inside out" and all this other stuff is just fluffy feel-good nonsense (see how charitable you feel when YOUR job is lost to a foreigner and you can't get another one for 12 months or longer).
2. Multinationals have no loyalty to any flag, only money. That is a smart acceptable choice for them to make in the free market... but the US and the EU need to make their own smart choices and tax and tarriff the bejeebers out of these multinationals. Wake up and recognize that regardless of what the company calls itself, it is _not_ a domestic company unless it has significant % of domestic workers. Offer incentives ONLY for things that benefit your own country (like higher domestic worker headcounts, salaries, working conditions, favorable gov't contracts, etc).
3. Even if you exported every single job in the US and EU to India, India would _still_ be stricken with terrible poverty and sweepingly backwards beliefs (hey we have plenty of those idiot beliefs in the US, too, but up 'til now they haven't ruined our economy). Meanwhile, by exporting all the jobs in my speculative example...you've raised their standard living one notch and lowered the US and EU's standards of living by 100 notches apiece. Ah, but "3rd worlders deserve to eat" too, right, so this net loss is an acceptable sacrifice to assuage your white guilt. I can countdown the seconds to the first "racist!" reply I'll likely get to my post: I don't have a problem with India or it's culture. It has hosted some of the oldest civilizations on the planet and has many beautiful and respectable qualities. However, the overcrowding there is their own fault (they are quite smart enough to know where the babies are coming from) and because of this long history they've had longer than the rest of us to sort out their own problems. Forgive me if I don't want to offer them the Western Teat to suck dry and don't have much sympathy for their poverty problems (saddle some blame on the British empire if you like, they deserve some of it and I'll agree with you, but what country on this planet doesn't have periods of oppression in their history?? The statute of limitations is running out on that one...time to thrive on your own, guys).
Let's do business with each other so that a rising tide can raise all boats. Let's not hand over the business to folks we feel phony sympathy for (or can get the cheapest labor from) in order to raise 1 boat and sink 10.
Re:Message sent, but will it be received? (Score:3, Interesting)
"I've noticed that there is a general lethargy, or laid-back attitude while doing business in Europe."
Laid-back attitude is NOT lethargy. I don't live to work, I only work as much as I need to in order to live as comfortably and securely as I need. I don't work to make YOU rich, and I certainly have no loyalty to you (my dear corporatist employer, not you the poster) since you're showing no loyalty to me.
Laid-back attitude is healthy for human beings, you know? Maybe Europeans get fewer ulcers - I don't know if it's the case, but it certainly is the idea.
Re:Message sent, but will it be received? (Score:1, Interesting)
It'd make far more sense to locate IT companies inland where land is much cheaper, people can freaking LIVE on $40k and buy a house, etc.
The entire reason they're shipping all the jobs to India is this all-or-nothing mentality where the companies want to be in either California or India, nowhere in between. And they've got these ideas that we're all spoiled rich techs just because we're living where THEY put the blasted jobs.
Re:There was a story when I worked at Microsoft (Score:3, Interesting)
You glossed over a key point. IBM's CEO Sam Palmisano like many CxO's, had absolutely zip to do with founding IBM though to his credit he worked at IBM or a subsidiary most of his life. since 1973. But I wager he's invested very little of his personal wealth in IBM equity other than maybe through the employee stock purchase plan, which is more of a benefit than a case of gambling your personal wealth on the success of the company.
One bit from his IBM bio:
"Mr. Palmisano has served as senior vice president and group executive for IBM's Personal Systems Group; led IBM's strategic outsourcing business;"
Apparently outsourcing is a key feather in his resume cap.
Ya know, I have no problem with CxO's who put all their personal assets on the line, and risk everything, to start a company and invest most of their waking hours for years in making it a success. God damn they deserve to reap huge rewards if and when they succeed.
On the other end of the scale I do have a big problem with the the rock start CEO's like Carly Fiorina, who invest absolutely none of their own wealth in an equity stake when they take the helm of a company. Instead they demand and are handed huge cash and equity stakes for just walking in the door and for being adept at social networking, crafting their image, political manuevering and climbing over the top of their teammates to get to the top.
When you have CxO's who have no real stake in the company they run is it any wonder many of them crater the company. Even if they fail completely their signing package up front and their golden parachute at the end insure they will have more wealth then most of us can dream off, even if they are a complete screw up.
They rock star CEO's also seem real short on investing in R&D and developing innovative products. More often than not their stewardship of the company consists of laying off or outsourcing enough people each year to maintain the companies profitability, and their grand plan is merger and acquisition which is a lot easier than invention and product development.
Re:There was a story when I worked at Microsoft (Score:5, Interesting)
I wont win any mod points for this but ya know bashing Wal-Mart is easy but the fact is that company is successful because they play by the rules of the game and they play really well.
You should watch the bio on Sam Walton on Biography channel. I despise rock star CEO's that walk in to multibillion dollar companies and run them in to the ground. That is not Sam or the Walton family. He and his family started with next to nothing and a tiny five and dime retail store in a small town in Arkansas. They succeeded because:
- They worked really hard, and I mean really worked as in they all stocked shelves and drove around finding products to sell at good prices
- They gambled everything they had on their business multiple times and they could have easily lost it all numerous times
- They were ruthlessly efficient, it can be cruel especially to workers and suppliers but if you are not you dont succeed in retail.
- They gave people what they want, they sold the products people wanted at the best price in town. That is the classic definition of competition in retail. They did't win through bombing their competitors, or cheating or anything else. They competed, the competed well and they won.
Yea it sucks that they stock their shelves with Chinese goods but the fact is if they didn't someone else would and they would go under. Fact is Chinese goods are way cheaper than American made goods and you can't change that now unless we start restoring trade barriers or push American worker's wages down to 30 cents an hour.
Yea it sucks that they dont pay their employees very well. But you know what, running a cash register and stocking shelves are some of the lowest skill jobs around, especially in the era of bar codes and RFID. Fact is if I dont go to Wal-Mart I go to a grocery story with do it yourself checkout. You see even I can scan bar codes, feed money in to a cash register and put my groceries in to a sack, so I dont see the value in subsidizing a unionized grocery worker to do something that requires no skill. You do have to kind of wonder about the sanity of unionized grocery store workers commanding some of the best wages and benefits in many small towns. They are people with no actual skills and in free markets people are supposed to get paid based on what their worth. Grocery store workers are not worth a lot.
The other thing you need to appreciate about Wal-Mart is they have probably the most sophisticated and efficient computerized supply chain on the planet. They have giant computers in Arkansas that track every transaction in every store and make sure the right goods arrive at the right place at the right time. Your mom and pop store cant compete against that, in retail, inventory management determines the winners and losers, not sentimentality. Wal-Mart now has economy of scale almost no one else can match but the fact is they Walton's still beat their competition when they were in one five and dime in Arkansas because they worked really hard and they played to win.
All in all the Walton family are an American success story. If you are going to ridicule and crucify them for succeeding you are basicly ridiculing every aspect of Capitalism. Its is a deeply flawed system in a lot of ways, but so are all the others. The Walton's are just grand masters of the system they live under.
Re:There was a story when I worked at Microsoft (Score:4, Interesting)
Always has been like that, always will be. The Romans used slaves to build marble villas for the governers. Medieval knights had serfs working the fields to put food on the banquet tables in their castles. Peasants worked in cotton mills to keep the industrialists in mansions. Now office drones sit in cubicles to help chief executives pay for their privates jets. This isn't a new thing, I don't know why you're surprised.
In fact now the gap between the rich and poor is smaller than ever. In the 14th century if you worked picking potatoes, that was your lot, you'd never be anything else. You worked all the daylight hours and lived in a mudhut, most of your children died of disease and you ate stale vegetables and drank filthy water. Nowadays, even the poor have great opportunity. A man with no money living in a box can drag himself up and start a business and become a billionaire. Even the poor live in relative luxury, with housing, food, education and healthcare paid for by the government.
professionals who used to be able to raise a family in a nice home on a single income now barely scrape by with two incomes.
Of course, in the 'good' old days, poor families didn't spend their money on televisions, computers, fridges, microwaves, indoor toilets, supermarket meals, fizzy drinks, new clothes, cars, holidays abroad, central heating, air conditioning, mobile phones, hot water, leather furniture, detached house with four bedrooms, garage and big garden, not to mention thousands of other luxuries which weren't available when only the man of the house went to work. All these things COST MONEY. You want today's luxuries whilst living yesterday's lifestyle. Well unless you're rich you can't have it. I'm sure if you cut out all the expenses, you could live like they did in the 1950s, with the wife staying at home, and everyone shitting outside in a shed.
Re:Message sent, but will it be received? (Score:2, Interesting)
Why aren't they? Because companies are controlled by boards, and boards are made up of, you guessed it, other CEOs. The executive suite in corporate America has become a cabal where grossly weathy individuals realize that "Sure, as I board member I may not be getting the best value for my company by overpaying the CEO, but by doing so I ensure that CEO salaries in general stay ridiculously high."
Re:The trouble I'm having is (Score:3, Interesting)
It's at times like this that I wish economics was a more exact science. Right now there's still a lot of room for religion-style blind faith (from the belief, which I hold, that concentration of wealth is going to bring it all down, to the belief that if there was simply no regulation it would all work out, and everywhere in between).
The current theories, from what I know of them (probably not as much as real economists) smack of "uniform spherical consumers on a horizontal frictionless market surface"-style constraints. If only we had the computational power to simulate a planet-full of humans, and society's laws and norms, we could run experiments to verify the theories!