June 27, 2005


Fire in West, hire in East (Asia Times, 6/28/05)

As it proceeds with layoffs of 13,000 workers in Europe and the United States, IBM Corp plans to add about 14,000 positions in India this year, according to a confidential company document made public by a Seattle technology workers' union.

IBM has about 329,000 employees in 75 countries, including about 130,000 in the United States. The company announced last month that it would cut 10,000-13,000 jobs, about a quarter of them in the United States and the rest in Western Europe.

"IBM 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." [...]

In an interview with the NYT, however, IBM senior vice president Robert Moffat explained that the buildup in India was attributable to both a surge in demand for technology services in the thriving Indian economy as well as the opportunity to tap skilled Indian software engineers for worldwide project deployment. A third of IBM's workers in India hold PhDs, and 60% of them are engineers. Lower trade barriers and cheaper telecommunications and computing ability allow a distant labor force to work on technology projects, Moffat said, adding that IBM 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, Moffat told the NYT, but not the most important consideration. "People who say this is simply labor arbitrage don't get it. It's mostly about skills."

Posted by Orrin Judd at June 27, 2005 10:06 AM

If your job can be done by someone in India, you better change jobs, because it soon will be.

Posted by: b at June 27, 2005 10:37 AM

Heh. I predict they'll be very sorry, if my experience with outsourcing work to India is any indication. For instance, on one project I had a support staff of 6 Indian engineers, which made the project take about 50% longer with lower quality results than if I'd just done it by myself. But hey, we were outsourcing to save money.

Posted by: Annoying Old Guy at June 27, 2005 10:40 AM

There are very definite limits to outsourcing. A PhD from most Indian universities, not IIT, is little more than toilet paper. And English language skills of the sort needed even in IT are quite lacking.

The ability is certainly there, the training is not.

Posted by: bart at June 27, 2005 11:36 AM

They aren't worth less than American college degrees.

Posted by: oj at June 27, 2005 11:45 AM

It's easier to train someone who knows nothing about computers but speaks colloquial American English than to train someone who knows nothing about computers and doesn't.

American grad schools are superior to pretty much everything overseas. Even the best foreign universities like Oxford, Cambridge, Tokyo, the grandes ecoles, Heidelberg and the Technion would be at best 2d rate in the US, on a par with Rutgers or Ohio State.

Posted by: bart at June 27, 2005 12:12 PM

When a fellow says it hain't the money but the principle o' the thing, it's th' money.

Frank McKinney Hubbard (1868-1930)

Posted by: TimF at June 27, 2005 12:18 PM


Yes, they're pretty universally useless.

Americans won't be trained--it's hard. That's why they go to school in the first place. It's easy.

Posted by: oj at June 27, 2005 2:00 PM


That's not quite right. The truth is, smart and capable Indians don't work for multi-nationals. They start their own companies or join their friend's startups. The one guy on that staff who had talent but no training split for a startup as soon as he started showing some useful capability. In talking with others who've been involved with the outsourcing, that was a common story. Among the technorati, it is boom time in India and they're not going to waste it as a wage slave.

Posted by: Annoying Old Guy at June 27, 2005 4:26 PM

And let us not forget, folks: These Indians holding outsourced jobs now have buying power. Which translates into more of everything, even more software jobs in the US.

Why no one ever mentions that in the outsourcing debate, I'll never know.

Posted by: Brad S at June 27, 2005 8:32 PM


Thank you. Indians are every bit as entrepreneurial as Jews or Cantonese. An IBM isn't going to succeed in outsourcing unless it chooses to utilize Indian companies, rather than trying to hire Indian workers directly.

Posted by: bart at June 28, 2005 7:22 AM

My Wednesday tech group discussed this yesterday.

Dell brought its tech support back from India to Texas.

Consensus view: India has a lot of low skilled programmers who get solutions by brute force, but that in 10 years they'll be better.

Make that South India. North India has mostly illiterates.

Posted by: Harry Eagar at June 30, 2005 5:07 PM