This has been happening for a while, ever since IBM remade itself as a consultancy, they've been shifting operations to low-cost countries. Granted, "International" is certainly in their name and the consultancy service is called "Global Services" so you have to admit there's some truth in advertising there.
The funny thing is that their moving offshore seems entirely focused on improving their own profitability. Which is to say, they're not moving off shore to compete on price, they're doing so for their own benefit. So from the customer's perspective, IBM Global Services is all about buying Indian labor at paying on-shore large American consultancy rates for it.
IBM has been in the process of leaving Vermont for a decade. The writing isn't just on the wall, they've been actively shedding everything other than the line. If I remember correctly it was blamed on the state of VT not giving them favorable enough treatment. It was so long ago I don't remember exactly what happened with the state, but they were going to axe one of the plants at either Essex VT or Fishkill NY no matter what VT/NY did.
More generically speaking, IBM has been getting worse at seeing past the next quarter. I know people that got the boot in the first big round of VT layoffs that make much more money to keep doing their same old job, for the same plant, just this time as sub-sub-sub-contractors.
This article is slightly dubious. I have done a lot of work for IBM, they have been a great client, I admit that, that fact may bias me a bit but from my perspective, what IBM has been doing is reducing permanent workforce with contract labor, that can be scaled up and down on a per-project basis. Is it a cost cutting measure? sure. Does it mean that Americans are loosing jobs? no. But it is easy to skew the numbers when you only show that IBM is shedding jobs. But when it is all tallied some of those jobs are being replaced with US based contract labor. This is the reality of the US technical workforce many times after a project you just don't need specific technical talent. The workers don't want to pasture and the employers don't want to carry them until they have work they can utilize them on. My experience is IBM has been moving to an on-demand workforce model. Their is no doubt that some of that is moving offshore but without mentioning the upswing in US based contractors the article does not paint the whole picture. Another fact not mentioned but that I hear from many IBM'ers turned freelancer is their average take home is higher in this model because IBM is willing to pay higher rates to only have to engage when the deals are inked.
There is a whole argument to be made about their ability to retain really talented individuals with this model, but it's just not the market they service.
Enterprise America is very different from small company America, that is why I made mention of talent retention, it is a tangential but related conversation but it does not really fit in the space of what the article is lamenting. I have worked in both, I prefer small business America because their is a stronger focus on quality and individualism but sometimes the enterprise is where the bills are paid. Those of us not in the valley have to split our times between what we would like to do and lucrative contracts that the likes of companies like IBM provide.
The interesting part is it has created a culture of something akin to special forces teams, where groups of caravan style freelancers who have worked together in ad-hoc groups tend to come together on contracts many who have worked together many times over the years and yet other who have worked with others that you know. So sometimes you will go into a contract with guys that you don't know, but you know of them so the relationship develops quickly because it is like you know them. They are very talented individuals, but it's almost a mercenary mentality. They do quality work, but it is almost a robotic professionalism.
"Does it mean that Americans are loosing jobs? no. But it is easy to skew the numbers when you only show that IBM is shedding jobs. But when it is all tallied some of those jobs are being replaced with US based contract labor."
Agree.
Two points. One - I know that when ATT did layoffs in the 80's many (or at least some I knew these people) of those laid off got contracts with ATT as subs and used them to build up companies.
Second what you are saying also goes to the heart of the issue of job creation. People talk about startups creating jobs. But there is only so much purchasing power in the economy. A startup offering a product or service that is charging is going to take purchasing power away from a consumer or business that is most likely already spending that money somewhere. The only net gains sometimes are only if a country can take jobs from another country or a state or region can take jobs from another state or region or city.
> Second what you are saying also goes to the heart of the issue of job creation. People talk about startups creating jobs. But there is only so much purchasing power in the economy. A startup offering a product or service that is charging is going to take purchasing power away from a consumer or business that is most likely already spending that money somewhere. The only net gains sometimes are only if a country can take jobs from another country or a state or region can take jobs from another state or region or city.
That's the flawed zero-sum perception of economics, and history has proved that wrong. If it was true we'd still be living in caves and providing everything for ourselves.
In sense larrys is right, but your observations is correct as well, at any given time there is only so much wealth in a society and the division of that wealth will happen any way you assemble it. But to your point, there are periods of innovation that create new and novel wealth that expands the pool for everybody. But after that innovation period is over, consolidation and efforts to streamline happen. IBM is in that streamlining period in portions of their business while in others (Watson for example) they are very much in the innovation phase.
It's flawed over all space and time, yes, but it's true in a recession when total economic output (or at least, total economic output as available to the bottom 99% of the population) is shrinking.
The direct impetus for this column is IBM’s internal plan to grow
earnings-per-share (EPS) to $20 by 2015. The primary method for
accomplishing this feat, according to the plan, will be by reducing
US employee head count by 78 percent in that time frame. [1]
I work a lot with software platform teams @ IBM and they are absolutely swamped because of a shrinking workforce. Their technology is a decade behind and there is no sign of anything improving. When we've engaged their support team for software and hardware issues, the outsourced engineer barely knows how to operate in TSO/MVS. It's horrible all around.
I worked as a software engineer for their CIO division for a little while and the "2015 Deadline" is something everyone was acutely aware of. In fact when I left my manager was most concerned that if he didn't fill the spot immediately he would lose the headcount forever.
This is not about offshoring (although some of the work will go overseas of course). This is about IBM's customers growing tired of the endless expense and headaches of dealing with consultant-provided software. Need an upgrade? Hire a consultant. Need a new feature? Hire a consultant. Need to reconfigure? Hire a consultant.
Now that corporations have grown more comfortable using Software-as-a-Service solutions, they're telling companies like IBM to stop billing for consultants and instead just take over all hosting and maintenance. Obviously IBM should try and host as efficiently as possible (that is, with as small a staff as possible) so they'll need to shed consulting labor.
IBM is aggressively pursuing growth markets. Growth in the USA is more or less stagnant so they are looking elsewhere to increase revenue.
It doesn't hurt that in many growth countries you can get 2 developers (or support engineers) for the price of one American developer (or even better). This allows IBM to provide local services and support for less cost.
I just wanted to point out the irony that people are surprised when a company with 'international' in its name is becoming truly international.
On a more serious note, these developments are obvious to anyone who has followed IBM in the past few years. IBM has made a huge push to hire outside the USA, and according to some friends who work there have been content with attrition in the USA. I don't think outsourcing and offshoring have been resounding successes for many companies, but it makes sense that a company of IBM's size can do it right. Ultimately I see globalization as a good thing; IBM is adding value by making their operation more efficient (and of course hiring competent people in poorer countries).
Having lived within miles of this plant for almost a decade; no one is surprised by this. The vast majority of jobs they offer pay a tiny bit better than the normal jobs around (which are much, much higher than the average of the country); but I don't see it as a huge loss, though a loss for sure.
This says quite a bit about VT as well, which is pretty anti-business, as much as I love Vermont. Personally, I am not surprised by this.. it has been talked about for years that there are less and less things going on at IBM in VT these days, and the end is nigh.
I disagree in this instance. This is about a large corporation acting in an anti-social manner.
In almost a reflexive manner, we've come to blame ourselves or local government for this type of action but that blame is misplaced. Corporations have obligations to society the same as individuals do.
idk, I don't really see any reason that it is better to give vermonters jobs at 10% above the median wage for the area than chinese people or wherever these jobs are going. I do think corporations have certain obligations, like not polluting, following the law, etc... but keeping jobs.. that is a hard one for me to swallow. I think redundancy in manufacturing is inevitable and good (in the long run) as everything goes toward automation; I certainly would not want corporations to be forced to hire people to do what robots can do.
Maybe I am taking a leap here. It is undeniable VT is anti-business (high taxes, nearly impossible to build, no billboards, high minimum wage) but maybe this exact same plant would be leaving Florida or Texas as well.
This is a pretty crummy submission. This blog post is from three months ago, doesn't really say much, and its only source is a Cringley rumor article from March 2012.
The funny thing is that their moving offshore seems entirely focused on improving their own profitability. Which is to say, they're not moving off shore to compete on price, they're doing so for their own benefit. So from the customer's perspective, IBM Global Services is all about buying Indian labor at paying on-shore large American consultancy rates for it.