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IBM Shifts 14,000 Jobs to India
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.'"
I'm sorry but IBM is speaking to European workers very clearly here, however I'm not sure they're listening. The constant strikes, the 5+ weeks of vacation, the voting down of the EU constitution to avoid US-style capitalism. These jobs are vanishing into India because of the cost and headache of dealing with European unions, workers, culture, and bureaucracy. Frankly it's a pain in the ass, and for a market that often has little growth potential. Asia isn't just where the cheap labour is, it's also where the growth is, and the governments eager to work with you, and the best bang-for-the-buck for companies seeking to invest. Until European workers learn to compete aggressively we'll keep on hearing stories like this of companies that just shrug and say "fine, have it your way." Apologies, but something's gotta give.
And this happens just when I was starting to think of IBM as the good guys...
Have you ever wondered How to Take Over
Here is the IBM Union website, if anyone is interested.
I guess a programming major insn't enough. Now I need to learn Indian as well.
lol: You see no door there!
The problem with outsourcing is that eventually the cheap work gets more expensive, then it becomes too much of a burden and things have to shift again ...
So, gradually, the corporations will pick random underdeveloped countries and beef them up to a point where the workers are too expensive, then they'll move on - until there are no underdeveloped countries left, just bloated overdeveloped cesspools full of unemployed engineers and white collars.
[I am not saying anything either way.]
Except, we're beginning to realize that you do indeed get what you pay for.
Individual companies can't get away with shipping jobs to India due to the offshoring stigma, so what do they do? They hire consulting firms like IBM who basically do the dirty work for them. Problem solved; good cheap labor at a fraction of the cost without it being a PR nightmare because technically the company isn't offshoring. I've seen this happening more and more. Kind of scary.
Top 10 Reasons To Procrastinate
10.
I see that you're claiming that Indians are unable to produce quality software and hardware designs. Can you please give some tangible examples/proof of this, and the resulting failures? Indeed, what makes an Indian any less of a programmer than an American or a European?
Cyric Zndovzny at your service.
Just so long as they understand they're going to be selling their services and products at the lowest cost as well.
This whole thing is just the money sloshing around the planet to reach economic equilibrium. Soon enough wages will rise in India and the dollar and Euro will drop, and the pressures will relent somewhat.
I do wonder about the canonical science fiction question. It's already far more productive to have cheap computers do the work rather than expensive humans for a range of services. What happens over the next few hundred years as the collection of services done by computers grows ever-larger?
What good is capitalism for workers when there's absolutely no scarcity of labor? Money is just a measurement of scarcity, after all, and if there's no scarcity in labor, there's no money.
- jon
Ganymede, a GPL'ed metadirectory for UNIX
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.
To the USA and EU. The jobs disappearing from EU were preceeded by US layoffs some time ago. And it is not just IBM, but I think that many here know that already.
I prefer the "u" in honour as it seems to be missing these days.
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....
Sure, sometimes the means is, but this time? Those 16000 jobs still exist, they'll just be held by different people. Presumably those in India need to feed their families as much as those in the EU - seems morally neutral to me.
Socialism: a lie told by totalitarians and believed by fools.
Following the specs to the letter without discussion is a sign of either poor pay or poor management. A poor manager is one who gives out specs and expects them to be followed without question. That's not what a (good) developer (or development team) would ever do.. that's what a "programmer" would do. If you're being poorly managed or not paid enough, why argue with the manager.. it's a lot easier just to follow the bad specs and render yourself blameless even if the job turns out bad. Indeed, I'd say at least 50% of development budgets are spent on projects which never see the light of day due to this problem.
IBM was founded, built, financed, and supported by Western countries, principally the US, UK, Japan, and Germany. The US, especially, protects IBM's intellectual property, provides a secure environment for business, and enormous amounts of government contracts. The great bulk of IBM's customers are in the West.
I honestly believe that IBM - and all of the firms so happily laying off their employees in order to find cheaper labour - are acting in an immoral manner. Outsourcing is destroying lives, destroying economies, for the sole point of increasing corporate profits - profits that go, essentially, to a very small percentage of the population. For goodness sake, having a 401k growing at 4% doesn't really matter that much when you're laid off.
IBM is not trying to help Indian workers - IBM is simply trying to cut it's labor costs. Globalization has accomplished the dream of so many capitalists - labor is now a commodity, and labor is powerless.
The American - and Western European - middle class is evaporating before our eyes. When the middle class jobs are sent overseas, the entire structure of our society is in danger. We'll became lands where the few with massive wealth dominate the increasingly poor masses. Democracy depends on a healthy middle class. Destroying that democracy is indeed immoral.
/* Dang, I can't type that well. */
Gartner just released a study of the top five reasons offshore deals go bust. I hope IBM was paying attention. It sounds like a lot of companies jump into these deals because of the labor differential and then find out later it wasn't such a good deal after all. There are a lot more factors to consider than just free trade, losing American jobs, and profit. Long-term viability has got to be high on the list of things to consider, right? (My blog on this)
Maybe 'Economics 101' boils down to:
(1) Look for ways to reduce costs
(2) Move jobs overseas to exploit cheap 3rd-world labor
(3) Profit!
but 'Economics 102' adds:
(1) Cheap 3rd-world workers spend new pay on basics like decent food, shelter, and medical care, thus greatly improving their lives, but have nothing left over to purchase still relatively expensive luxury goods and services provided by their American or European employer
(2) Unemployed or now-underemployed former American or European employees now can't afford expensive luxury goods and services provided by former employer, either
(3) Profits evaporate as sales plummet
Henry Ford understood this basic economic principle, and made sure his employees could afford to purchase the Model T's they built.
'Econ 103' goes on to explain how companies that move their labor and infrastructure costs overseas still get to deduct those expenses when it comes time to pay their US taxes, but none of that money stays here to generate income tax, sales tax, and other tax revenue, so government services must shrink. And every dollar moved offshore also costs many, many more dollars lost in other goods and services that lost employees can no longer purchase, resulting in additional jobs and tax revenues lost, etc.
It's never as simple as it first seems.
Serving your airship needs since 1995.
Um -- you're not paid based on how much money you generate for a company, you're paid based on how replaceable your job is. Guess what? If the janitor stops taking out the trash, eventually the company stops making money. Are the janitors worth a billion dollars a year? No -- because they're paid based on the value of the work they do. They are easily replaceable.
Same for engineers. You are paid based on how unique your work is. If your work can be easily replaced by another engineer, you're low paid. If it is sufficiently unique, then you are higher paid. Supply and demand, man. Supply and demand.
Want to be the one who collects the money at the top? Easy. Start your own company and create some jobs of your own.
Unions can create temporary bubbles where you get higher pay than you deserve, but ultimately it hurts you. Would you rather have a 20% more pay temporarily, but then no job at all when it's outsourced, or would you rather have more stability, just at a market wage?
Europe is choosing "no job" every day.
Sometimes it's best to just let stupid people be stupid.
And the response of these workers and others in Europe is that they don't want to be chattel/wage slaves. Shocking isn't it? It seems like people in Europe can somehow envision a world where there is such a thing as enough profit, and that at the end of the day corporations exist for the betterment of all of society - not vice versa.
One of my old bosses had a great expression - "Trees don't grow to the sky." It was in relation to commodity trading, but it's applicable in many areas of life. Growth can not be infinite - it's simply not sustainable. At some point you need to be satisfied that you're running a profitable business, creating valued products.
Causing unemployment in Europe and the U.S. to save a couple sheckles on the front end will ultimately result in less wealth and less growth in the long run. You need someone to buy your products, and as others have already pointed out, the unemployed and minimum wage workers of the world aren't going to be able to do so. All the arm chair "free marketers" need to dig a little deeper with their analysis than parroting "corporations are in business to make money" and thereby whatever they do in that line makes sense - that may be a primary goal, but it certainly doesn't valildate or justify every decision corporations make.
Greed is good only works up to a point - after which you start eating your own young.
It just doesn't work that way. Fact is companies are under enormous stress (from shareholders) to increase profits year by year.
You can do this 1 of 2 ways, either increase revenue or decrease costs.
So the cost saving is *never* passed on to the consumer, it's passed on to the shareholder, via a larger reported profit and an increase in the share price.
If I had created the world I wouldn't have messed about with butterflies and daffodils. I would have started with lasers
The position that outsourcing is just good business and benefits the consumer may be true in the short term but has dire implications further down the road. By outsourcing these middle class jobs you are in effect removing the purchasing power of the former employees. The majority do find new jobs, but with lower salaries or with fewer benefits (forcing them to pay the cost). This is coupled with the fact that the US is importing more products than it exports. Which means that jobs that should involve Americans working to manufacture products for other Americans to purchase are becoming scarce as well. This leaves only the services industry which tends to pay bottom dollar salaries and provide few benefits (if any). My question is that what good are lower priced consumer goods if there is no middle class to purchase them and what economy can rely on a service based model if the service cannot be afforded?
[I am not saying anything either way.]
Way to straddle the fence at the end there. Did you put that there because you actually have no opinion or were you afraid of the random Slashdot mods?
You probably would have gotten -1 Heartless Capitalist if you'd said that the Indians should have the jobs.
And you probably would have gotten -1 Economics 101 if you'd said the jobs should stay in the US.
I salute your ability to attain a +4 Insightful (as of the time of this writing) without actually saying anything at all.
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This isn't the sig you're looking for. Move along.
> Want to be the one who collects the money at the top? Easy. Start your own company and create some jobs of your own.
There, in a nutshell, is the problem. The system we have now is designed to funnel the profits into the hands of a few people, and after multiple decades of this, you end up with a situation like we have now - 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.
This is a cycle of free-market capitalism, it's inherent in the structure of business. As the money gets concentrated at the top, there's less to go around. That's why you see small businesses closing left and right, while Starbucks and Wal-Mart open yet another store in your area. Even if you have an employee-owned company with profit sharing, it will eventually get swallowed up or plowed over by a larger company whose owners screwed people over so they could gain obscene wealth.
What's the answer? I don't know. Some say eat the rich. I say form cooperatives. The solution is probably somewhere in between.
Where do you think the money goes? Into mattresses? No -- it goes into investment, which creates more jobs. 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.
The world you think used to exist never existed. The reason people need two incomes now is because they SPEND MORE MONEY. It is entirely possible to live on one income, if you don't live luxuriously. The last generation simply accepted living on fewer luxuries.
Sometimes it's best to just let stupid people be stupid.
Since 86% of stock is owned by the wealthiest 10%, money speny buying stock (or stock-price appreciation caused by businesses) goes pretty much to the rich, accelerating the concentration of wealth.
I have trouble imagining what kind of economic efficiency, or society, we will have when a (relative) handful of people own everything, and the rest of us are serfs.
That's when slashdot mod points will be the next currency :)
Not necessarily. Stock is bought "used" unless it's from an IPO.
...money speny buying stock (or stock-price appreciation caused by businesses) goes pretty much to the rich, accelerating the concentration of wealth.
Where did he say "stock"? He said "investment."
- It means investing money in banks: giving everyone else a better chance for a loan at a lower rate.
- It means investing in new companies: giving people jobs, new/better goods and services, and opening up potential for others to invest (shareholders).
- It means starting your own company, that's an investment, too.
- And yes, it means investing in the stock market. And while you may think they are buying the stock "used," if no one buys the stock, the price of the stock goes down because there are more sellers than buyers, and that affects the underlying company in many different ways.
When I buy IBM stock, IBM doesn't see a penny of that money; some goes to middlemen, and the rest goes to a former IBM stockholder.
Uh huh... right. And what happens when IBM pays you a dividend on your shares? And what happens when you sell those shares for a profit somewhere down the road? And what happens when IBM has more power to leverage it's higher share prices.
It's not like you're just paying someone for a piece of worthless paper.
Since 86% of stock is owned by the wealthiest 10%...
Source of this statistic?
Wow. You are stunningly ignorant about the stock market. How does purchasing equity concentrate wealth elsewhere? You have purchased SOMETHING. You can earn profit on it (indicated above). You are investing in the economy.
I have trouble imagining what kind of economic efficiency, or society, we will have when a (relative) handful of people own everything, and the rest of us are serfs.
The reason you may have trouble imagining this is because it is ludicrous. The economy is a pie. The richer among us have a large share of the pie. When the economy grows, the pie gets bigger. Their piece of pie grows, yes -- but so does everyone else's.
It's not a zero sum game. That's just something those interest in class warfare like to put out there for scaremongering.
Ironically, the word ironically is often used incorrectly.
Actually, it is -- all of your evidence is anecdotal. Because things suck for you, then it must suck for everyone. Well, got news for you -- it DOESN'T suck for everyone. In fact, it sucks a helleva lot less today than it did in previous generations. You just have this rosy colored view of 50 years ago that never existed. People considered television a luxury! People didn't buy books, they went to the library. And people saved for a damn long time to be able to afford a house. Vacations were driving to see Aunt Marge in Iowa.
when in fact the economic environment has changed *radically*.
Indeed. We have more mobility, more communication, more opportunity, more education, more nearly everything. Ironically, we also have far more whining. You're miserable because you have unrealistic expectations of things that are supposed to be handed to you.
I have a friend. Dude is about 42-43, works as a parts export manager at Honda. Dunno what he makes, but probably, eh, $60-70K. He is a millionaire -- from nothing. How did he do it? HE SAVED. He lived very modestly. He invested it. He has a wife and kids, but he still lives relatively modestly. You would never suspect he has that much money.
So did he steal the money? Did his ill-gotten gains come from the backs of the poor?
Sometimes it's best to just let stupid people be stupid.
" That's why you see small businesses closing left and right, while Starbucks and Wal-Mart open yet another store in your area."
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.
@de_machina
The system we have now is designed to funnel the profits into the hands of a few people
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.