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IBM Businesses The Almighty Buck

In a Symbolic Shift, IBM's India Workforce Likely Exceeds That In US 491

Posted by timothy
from the rising-tide-lifting-boats dept.
dcblogs writes "IBM has 112,000 employees in India, up from 6,000 in 2002, with an average wage of about $17,000, according to an internal company document. That wage level may seem shockingly low to U.S. IT workers, but it is in alignment with IT wages in India.The Everest Group said the annual wages generally in India for a software engineer range from $8,000 to $10,000; for a senior software engineer, $12,000 to $15,000, and between $18,000 and $20,000 for a team lead. A project manager may make as much as $31,000. IBM employs about 430,000 globally. According to the Alliance at IBM, the U.S. staff is at about 92,000. It was at 121,000 at the end of 2007, and more in previous years. It has been widely expected over the past year or two that IBM's India workforce was on track to exceed its U.S. workforce, if it hadn't exceeded it already."
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In a Symbolic Shift, IBM's India Workforce Likely Exceeds That In US

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  • What happems (Score:5, Insightful)

    by colinrichardday (768814) <colin.day.6@hotmail.com> on Thursday November 29, 2012 @11:59AM (#42130401)

    What happens when corporations can no longer exploit global wage differences?

    • Re:What happems (Score:5, Insightful)

      by h4rr4r (612664) on Thursday November 29, 2012 @12:02PM (#42130447)

      What does that matter?
      By then we will think $17k/year is a good wage.

      • Re:What happems (Score:5, Insightful)

        by colinrichardday (768814) <colin.day.6@hotmail.com> on Thursday November 29, 2012 @12:06PM (#42130517)

        But if most people make $17k/year, how are corporations going to threaten workers with outsourcing?

        • by h4rr4r (612664)

          By keeping the wage at $17k/year, ask for a raise and your job gets outsourced.

          • Re:What happems (Score:5, Interesting)

            by Creepy (93888) on Thursday November 29, 2012 @12:45PM (#42131055) Journal

            Actually, we've seen some of that at my job - in India we either get job attrition or requesting raises. This has caused a lot of jobs to be outsourced again, to China, where we get 4-5 workers for each US worker instead of 3-4. And the best part about it is the US was paying us to do it when US employees get replaced. Not sure about the current situation, as my company is now owned by Germans (we probably don't get as much US help to outsource anymore).

        • Because there will always be some one capable and willing to do the work for less.

          You only have to hang around /. and see attitude of multitude of people to unionized workforce.

          • A week or two ago there was a discussion about software engineer unions, and from my perspective it seemed that more comments were against unionizing than were for it.
            • Re:What happems (Score:5, Insightful)

              by zrelativity (963547) on Thursday November 29, 2012 @01:12PM (#42131471)
              I have never really understood why many Americans are so hostile to unionization. There appears to be decades of brainwashing in action and mythos regarding correlation between hardwork and financial success.
              • Re:What happems (Score:5, Insightful)

                by whitroth (9367) <whitroth&5-cent,us> on Thursday November 29, 2012 @02:01PM (#42132211) Homepage

                Brainwashing. 60 years or so of brainwashing, with it kicking in, seriously, in the late seventies. Then the active, overt support of the Republicans - Reagan's destruction of the Air Traffic Controllers' union was the opening assult. There's also offshoring....

                Most Americans have become suckers: those that aren't overwhelmingly feel isolated, and as though "they're the only one". There's only a few of us who have any real "enlightened self-interest", though I think a lot more would go union if they were given a real chance.

                We also need more socialists back in the unions, to make them honest again. After McCarthy & co chased them out in the fifties, some, like the Teamsters, were taken over for decades by the Mob; the rest, cowed, dropped all the social demands, and closed down to cover only working conditions, wages, and employee benefits, and started acting like the midieval guilds, whose purpose was to keep more people *out* of the busines.

                          mark

              • Re:What happems (Score:5, Insightful)

                by QRDeNameland (873957) on Thursday November 29, 2012 @02:11PM (#42132333)

                I have never really understood why many Americans are so hostile to unionization. There appears to be decades of brainwashing in action and mythos regarding correlation between hardwork and financial success.

                I think there's more to it than that. The sad fact is that in way too many cases, US unions became little more than protection rackets, where in order to get anything done one had to accept high levels of incompetency, featherbedding and lollygagging, not to mention instances of leadership by mob goons. Even at the height of unionization in the US, the majority of the workforce was non-unionized, and what they saw of organized labor did not generate much sympathy.

                Myself, I am quite sympathetic to the idea of workers organizing for greater leverage with their employers; however, every experience in my working life I ever had that brushed up against unions gave me the impression that they rarely brought any value to the table for anyone but them. It's a common perception, and perhaps that view is colored by brainwashing and mythology but there is more than a grain of truth to it.

                Or as a wiser man than I put it:

                Once upon a time the idea was good
                If only they'd a done what they said they would
                It ain't no better, they's makin' it worse
                The labor movement's got the mafia curse

                Frank Zappa - "Stick Together"

                • Re:What happems (Score:4, Informative)

                  by houghi (78078) on Thursday November 29, 2012 @03:32PM (#42133521)

                  What I get from postings is that there is a difference between a unionized and non-unionized companies and also that you can not choose your union in the US.

                  I live in Belgium and if the company has 50 people or more, there must be elections to have a union rep. Where I work we have less. I am member of a union. I have no idea who is or isn't and neither does my boss or HR department, nor do they care.

                  I can choose which union I go to or not be in the union anymore. The same laws will apply. The same rules will apply. Irregardless if I am in a union or not.

              • Re: (Score:3, Interesting)

                by Kjella (173770)

                It's not so much the rags to riches stories, it's that unions are far from perfect.

                1. Unions like all power structures start acting in their own interests and not the people they really represent, just like corporations or governments. That may mean generous benefits for the union leaders, making life miserable for non-union workers and in the worst cases it's a possibility for bribes and corruption.
                2. Collective agreements typically means those who contribute less than average get more than they deserve an

            • by tehcyder (746570)

              A week or two ago there was a discussion about software engineer unions, and from my perspective it seemed that more comments were against unionizing than were for it.

              Unions are socialist or collectivist and America doesn't really do socialism or collectivism. Then individual Americans wonder why they get shafted by their employers in the name of free market efficiency.

          • Re:What happems (Score:4, Insightful)

            by h4rr4r (612664) on Thursday November 29, 2012 @12:54PM (#42131201)

            Yeah, FSM forbid people want to be paid a reasonable wage and be able to survive not only now, but retire sometime in the future and even have healthcare. The gall of some folks to be expected to be treated like humans. Everyone knows only C level executives should get those sort of benefits.

          • Re: (Score:3, Insightful)

            by Synerg1y (2169962)
            I'm going to go ahead and challenge you on the word "capable", in a way outsourcing to India creates such poor results that the ongoing maintenance of crap that comes out of there is job security for us here in the states.

            A lot of companies are catching on though and bringing development back to the states and if they outsource it's typically to a U.S. consulting firm. I'm pretty sure that every last line of code imported from India needs to be burned with fire.

            And I still can't understand the tech s
      • Re:What happems (Score:5, Insightful)

        by bobthesungeek76036 (2697689) on Thursday November 29, 2012 @12:08PM (#42130551)
        And who will IBM sell computers to when everyone is making $17K/year???
        • by The Moof (859402)
          Big business. IBM got out of the retail computer industry when they sold off that part of the business to Lenovo.
          • I don't think you understand. What business is going to be able to afford IBM's computers? Who are those businesses going to sell their wares to when everyone is making $17,000/year? Expendable income will essentially drop to nothing with wages that low.
            • by matrim99 (123693)
              Businesses aren't making $17,000 a year, the average employee is.

              People aren't buying IBM machines; businesses are. One would assume that the low employee pay would help businesses be able to afford the expensive computers.

              The people making $17,000 a year are buying cheap, disposable items made by people making $5,000 a year.

        • Which computers do IBM today sell into the consumer market?

          IBM is primarily a service company today, and the hardware they are selling is to the corporate and govt market,

        • by schlachter (862210) on Thursday November 29, 2012 @02:16PM (#42132407)

          IBM sells mostly services/software to corporations...which have a ton of money to spend, regardless of employee salaries.

    • by aeortiz (1498977)

      We we all sing kumbaya round the campfire and world peace will be achieved :)

    • Re:What happems (Score:5, Insightful)

      by MyLongNickName (822545) on Thursday November 29, 2012 @12:15PM (#42130657) Journal

      It will be similar to the events that happened in the United States. Basically, we used to have a wild difference in median incomes by state. There is still quite a difference, but nothing like existed before the interstate highway system. State importance decreased and more people viewed their identity in terms of country than state.

      I see the same thing happening on a global scale. There will be rich countries and poor. Folks in the US are going to have to get used to not being the prima donna by default. Other countries will get much richer. We'll get a much more stable world, and one where country doesn't matter as much as it does today.

      Is it painful? yes. Will there be losers? Yes. But I think there will be many more winners than losers.

      • Yes - maybe. (Score:3, Insightful)

        by Anonymous Coward

        But I think there will be many more winners than losers.

        Maybe.

        But here's the thing, the economists say that the pie gets bigger and as a result, everyone's living standards increase.

        Yes?

        But, in the US, our living standards have been decreasing for over a decade.

        What the economists seem to miss is that at least in the near term, the World's economy can't grow fast enough to compensate for all the billions of people entering the World's economy. In other words, wages have nowhere to go but down. Add in technology - like communications being dirt cheap - and we'r

        • Re:Yes - maybe. (Score:5, Insightful)

          by MyLongNickName (822545) on Thursday November 29, 2012 @12:56PM (#42131235) Journal

          But, in the US, our living standards have been decreasing for over a decade.

          Yup. Basically we don't invest in our infrastructure, spend idiotically on wars instead of on our own people and expect our lifestyle to stay the same. We deemphasize education, performing below our peer group and expect our lifestyle to stay the same. I'd argue that the fact our lifestyle is dropping is proof that globalization is working as it should.

          We have real problems in the United States that were masked by the fact that we were the world superpower and came out of WW II relatively unscathed. Global competition is showing that we have some things to fix.

        • Re:Yes - maybe. (Score:4, Insightful)

          by ranton (36917) on Thursday November 29, 2012 @01:10PM (#42131425)

          But, in the US, our living standards have been decreasing for over a decade.

          In my opinion this is primarily because the living standards of the middle class rose to absurd levels in the mid to late 1900s. Those levels of wealth for common laborers was never sustainable unless we kept most of the world at third world levels forever. What we are witnessing now is a drastic reduction in wordwide inequality. This inequality is mostly being erased because the poorest countries are getting richer, but a small amount of the equalization is caused by the rich countries becoming poorer.

          Of course those whose income is based on their capital and investments instead of labor are making out like bandits regardless of if they live in poor or rich countries.

        • Re: (Score:3, Insightful)

          by tgd (2822)

          But I think there will be many more winners than losers.

          Maybe.

          But here's the thing, the economists say that the pie gets bigger and as a result, everyone's living standards increase.

          That's because they're economists and work in theories, not realities. Economics is zero sum because there's an effective limit on productivity and resources. Only localized economic interactions can be non-zero-sum.

          Americans are rich because much of the world is poor. America's standard of living is declining for a simple reason -- a lot less of the world is as crushingly poor. Those people want their resources, and want to own more. In fact, America's standard of living would be vastly lower if there hadn

        • Re:Yes - maybe. (Score:4, Insightful)

          by swillden (191260) <shawn-ds@willden.org> on Thursday November 29, 2012 @03:20PM (#42133345) Homepage Journal

          But, in the US, our living standards have been decreasing for over a decade.

          Cite? Preferably one that doesn't equate median real income with standard of living. It's necessary to consider the dramatic decrease in price of many goods that were formerly considered luxuries but are now within general reach.

      • Well said.
    • Re:What happems (Score:5, Insightful)

      by ranton (36917) on Thursday November 29, 2012 @12:20PM (#42130713)

      Just take a look at manufacturing jobs that have stayed in the United States to see the result of manufacturing done in an area with high wages. [Almost] Everything is done by robotics. The only reason they use less robotics in third world and developing countries is because their labor is still cheaper than machines. Robotics keeps improving while global wages keep equalizing, and at some point the use of robotics will be even cheaper than cheap labor is today.

      Developing countries know they need to take advantage of this period in time, and use the money they are funneling from developed countries to improve their workforce so they can perform more skilled labor once this shift takes place. The US and other developed countries took advantage of the 1900s to do the same thing, and developing country's have much less time to advance than we did (but they have the advantage of riding our coattails). Unskilled laborers making decent wages will be a thing of the past on a global scale in the near future, just like what is happening in the US right now.

    • What happens when corporations can no longer exploit global wage differences?

      The same thing that happened when 19th century England exported jobs to a poor third world country called "Germany". The wages in poor countries rise as their productivity increases. When their wages and productivity reach first-world levels, then they are no longer poor.

      • by h4rr4r (612664)

        Unlike 19th century England today you can just keep outsourcing. India gets too expensive? Outsource to China. China too expensive? Southeast Asia, once that is too expensive, West Africa. Eventually you can outsource back to what used to be First world nations, but have slid into abject poverty.

    • We enjoy a higher standard of living because of global wage differences. Many countries do this. Let alone, having worked with individuals from said country, many found it easier to live on their home wages at home that supposedly equivalent wages here. Most of that came from expectations, I guess.

      So your going to have to alter their society to increase their costs, one way to do that would be to keep pushing their wages up but that would introduce social instability as inflation would follow the new buying

    • Global wages rises.

    • by Sir_Sri (199544)

      That will be when there are much narrower global wage differences.

      If you want general manual labour the difference between india and the US is almost a factor of 50. For IT you're talking closer to a factor of 3.5 or 4. And indian wages are expected to grow at 13% a year on average, so by 2020 that 17000 could be more like 45000. Doesn't seem like much of a cost advantage anymore does it? For these guys, who are already earning more than 10x the per capita GDP (nominal) wage growth probably won't be 13%

    • Re:What happems (Score:4, Insightful)

      by BeanThere (28381) on Thursday November 29, 2012 @02:21PM (#42132489)

      What happens when corporations can no longer exploit global wage differences?

      It's easy to spew vitriol at the 'evil corporations', but this is mostly irrelevant, and the reason becomes clear if you actually think about it for a bit ... here's the thing, even if outsourcing by US corporations were totally banned, the existence of those 112,000 Indian individuals presently employed by IBM would amazingly enough not in fact just magically disappear into thin air. On the contrary, they would continue to exist. They would continue to have IT skills, IT qualifications, would continue to represent useful labor, and would continue to work for whatever wages make sense in the US context. However, the difference is that competing Indian-owned conglomerates would form instead, and the organization would compete with US companies, instead of being owned by US companies.

      Which would you rather have, US-owned companies dominating global ownership of IT organizations, or US-owned companies becoming small bit players amidst even stronger global competition from hundreds of new "IBMs" all around the world?

      The core of the "problem" is not really the demand side of outsourcing, it's the supply side of it: Because no matter how much we whine about it, a world full of skilled people simply isn't going away anytime soon. On the contrary, more and more countries have more and more universities and have increasingly skilled workforces.

  • by Anonymous Coward

    Time for a union

    • Re: (Score:2, Informative)

      by Anonymous Coward

      Then watch IBM move to China to get ore cheap labor! American workers need to stop feeling so entitled to large wages and outrageous benefits. Then feel entitled to cheap products and services. Any company can't pay out money to employees in tons, then sell products cheaply and expect to succeed and make profit. Only when Americans change will they actually be able to find jobs.

    • Alliance@IBM = Communications Workers of America: http://www.endicottalliance.org/ [endicottalliance.org]

      The Communications Workers of America: http://en.wikipedia.org/wiki/Communications_Workers_of_America [wikipedia.org] is a labor union for communications and media workers; if you read the previous link, you'll see that it's the largest, with about 700,000 employees under their purview.

      I'm rather certain that software engineers don't count as communications workers, although I'll agree that communications workers are being displaced, as mor

  • by h4rr4r (612664) on Thursday November 29, 2012 @12:00PM (#42130425)

    I would say having most of your workforce in India, especially when we are talking about decent jobs not factory slave, is far more than a symbolic change.

    If this keeps going the only jobs in the USA will be retail, CEO and no job.

    • by Nyder (754090)

      I would say having most of your workforce in India, especially when we are talking about decent jobs not factory slave, is far more than a symbolic change.

      If this keeps going the only jobs in the USA will be retail, CEO and no job.

      Always be service industry jobs until robots get better.

    • by jonbryce (703250)

      Well last time I looked a couple of years ago, the typical salary was more like $8,000. If this keeps going, Indian wages will probably reach parity with US wages in about 5 to 10 years time.

      • by Creepy (93888)

        From what I recall, tech support workers earned about $8000-10000, and new programmers may earn that little (and many intern for 3 months to a year), but most with 2+ years of experience are a bit more expensive than that. About 5 years ago, we were hiring average workers and it was around $15k-16k by my guesstimate, but due to poor quality and attrition I've heard we usually hire better workers and get about 2 for each US worker now, prompting a move to China, where we get 4.

  • IBM (Score:5, Funny)

    by UncleWilly (1128141) <[UncleWilly07] [at] [gmail.com]> on Thursday November 29, 2012 @12:04PM (#42130489)
    India Business Machines!
  • Most people working in India change jobs for better money much more frequently than in the US.

    Going forward, technologies like Watson will probably eliminate all the level 1 (Help Desk, Support) jobs worldwide.

  • I understand that IBM wants to cut costs but with this scale work force migration to India, is that going to affect product quality ? I have worked with a ton of folks from India and I have absolutely nothing against Indians but I do see a difference in skill levels between American engineering grads and Indians (apart from those who come from the top institutions in India like IIT etc.) Most folks from India I have worked with are very sincere but they do not have a good understand of underlying concepts.
    • I know someone from IBM whose entire department was slowly shipped over to India.

      What happened is they transitioned to a few managers in the US who knew how to manage Indian workers. The way to do it is to be able to give very detailed instructions on what you want the Indian team to build. So now they have a few managers in the US, managing the workers in India. Note also that IBM does have a few teams of very good programmers here in the US, the kind that work on things like Watson.

      This may sound bad
    • by Anonymous Coward on Thursday November 29, 2012 @01:24PM (#42131639)

      I agree with you, I am an Indian, worked with IBM on a global team, and was not involved in service delivery. But I don't fully agree.

      The Indian education system is geared towards knowledge assimilation, not application of concepts. Therefore, you will find people who can rattle off the concepts, but cannot creatively use them. Also, it's also important to understand the business and social context of technology, and not just the spec list to really get to a point where you begin contributing into the next wave of what will be adopted into the mainstream.

      What I don't really agree with is the statement around nights up leading to patchwork, since it generalizes everybody's individual capabilities into the same bucket.

      As for the critiques, I have seen American IBM workers that are:

      1. Not willing to take up a responsibility that does not fall into their core mainstream. Read - not willing to take a risk unless it means a career move. At least Indians are willing to learn. And if the quality of work is so low, then it's because the American guys were not willing to take a risk and learn something new, so new hiring would need to happen.
      2. "It's 6 'o clock EST and I'm going home. I don't care how important your deadline is, I've got other things to do" - Indian peers are far more accommodating
      3. "I don't care about scheduling calls at 2 AM your time because I know you are cheap labor willing to be exploited" (actually most of us are, because you can't afford a house, car, family, life and any semblance of a vacation expense on an Indian salary with a single breadwinner for the family, so we try really hard not to screw up)

      The rate of interest for a home loan here is around 11%, the bank does not give you more than 80%, the rate of interest of a personal loan is around 21% (including all components that you pay) - contrast that with your housing market. In the current market here, the property rates are around $90 a sq.ft. A simple calculation will tell you that someone making $17000 simply cannot afford to buy a 900 sq. ft house here anymore. 900 sq. ft is a pigeonhole compared to the houses you live in. And that is the state of the relatively more skilled people in the Indian workforce. Do you blame us for trying hard to please our employer? That is the reason we work nights, and take risks to learn new stuff. At least we're willing to "ramp up"

      For a parent to send their sons and daughters to even an average institution (read not Yale) means their entire life's savings. I didn't have lab access to a DSO in my college, so I improvised with pspice - some of my peers were not so resourceul, maybe you refer to them when you talk about lack of concepts. And you are right. RTFM is key - not a lot of Indians do that (they try the RTFppt route, but ppts don't really say that much).

      There are far too many people here, too much competition, and too few avenues to succeed. You guys don't know how easy it has been for you so far. Shouldn't blame the world economy for catching up.

  • India: 1.2B; USA: 300M
  • QOS shift? (Score:4, Informative)

    by AuralityKev (1356747) on Thursday November 29, 2012 @12:41PM (#42131001)
    I'd love to see an objective measurement of IBM's quality of service from 2002 to now, mapped against the shift to a majorly offshore work model. I work for a subsidy of a very large consulting competitor of IBM's, and are witnessing the same phenomenon - more and more offshore workers tacked on to project teams that just drag everything down. The more offshore we're shackled with (and I really mean that - we're given no choice by service line leadership) the worse we are able to deliver on our projects. The biggest issue for me is that once we've been able to identify the offshore rockstars - the fabled guys you can actually work well with, trust, and receive good quality work product from, they either get instapromoted to management or realize they can get more than just the 17k/year salary or whatever it is they're getting and GTFO. Either way you don't get to work with them for long. Then you get whoever's free in the pool when you're building a project team - no calling "dibs" on the right guys for the job. Quite often you just get a warm body who isn't familiar with the tech you're working with, the processes of project delivery, or will refuse to perform any work unless you have mapped it out to the click.
  • by scorp1us (235526) on Thursday November 29, 2012 @12:52PM (#42131169) Journal

    By decree, we are ordered to use outsourced programming. Our core competencies are seen by our company as industry specific and coding talent is seen as general talent, like a secretary. So we end up outsourcing a lot to a firm in India.

    And what we got was crap. Now the fault is not entirely theirs. But in speaking in areas where they are at fault... The code is crap. I am in charge of audting the code we get back from them and it is mind boggling bad. To understand this more, I inquired to what schooling the "engineers" had gone through. It was about trade-school level, above high school but AA degree at most, which is not sufficient given the liabilities in our industry. Still 5 coders for the price of one domestically should still have some benefit? Well a lot of that got eaten away by the QA procedures that had to be put in place. Now the code we get is tolerable, and the Indian business is on track to (if they take additional clients) become an actual Indian Business Machines. Still there are enormous challenges. After going through all the effort we did to get usable code form the relationship, I'd rather have just hired a couple domestic coders. But we would not have the QA team that they now do. True, we would not have needed it, but now that it exists it is reusable. I am not allowed to see how much internal strife there is, I only get to see what their approved output (after QA) is so I don't know how much churn there is. What I do know is 5 $20k Indians still do not equal one $100k domestic engineer.

    Unless your company can weather a rocky start of a relationship like this (who can these days, especially when things are outsourced to be done faster) I don't recommend outsourcing. We still won't let them in our core code base because we need expert code, but they are free to write extensions to the core.

  • IBM is a 'service company' these days. That means they basically run call centers. So IBM having a lot of people in India is not surprising nor even an amazing fact.

  • by HangingChad (677530) on Thursday November 29, 2012 @01:35PM (#42131825) Homepage

    Back home IBM is one of the top 10 companies utilizing H1-B visas [h1base.com].

    And companies keep complaining they can't find enough locally grown peasants with the skills they need.

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