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

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."

Comments

What happems

[colinrichardday]

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

Re:What happems

[h4rr4r]

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

Re:What happems

[colinrichardday]

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

Re:What happems

[bobthesungeek76036]

And who will IBM sell computers to when everyone is making $17K/year???

Re:What happems

[MyLongNickName]

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.

Re:What happems

[ranton]

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.

Re:What happems

[h4rr4r]

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:What happems

[zrelativity]

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

[Synerg1y]

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 support... a few experiences and I now shy away from HP products because I don't ever want to have to deal with the warranty.

Re:What happems

[h4rr4r]

I like how you picked the recent past when real wages fell and outsourcing was going up.

Any other insight on this situation you clearly have no idea about outside of your ideology?

Re:What happems

[h4rr4r]

The only Class Warfare in the USA is the rich against the poor. The thing is they are winning too. All the while accusing any poor who dares speak up of being involved in jealously based class warfare.

If you want evidence you need only look at the continual lowering of tax rates at the top of the scale, the shrinking real wages, and the jobless recovery.

Re:What happems

[whitroth]

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

[QRDeNameland]

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

[BeanThere]

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.

Re:What happems

[Wansu]

  Look at Hostess...the company was forced to close its doors and go bankrupt. The unions would NOT negotiate or budge enough on their demands to allow the company to continue. Rather than the unions negotiate...they stood their ground, forced the company into bankruptcy, and ALL jobs with them are now gone forever.

Whoa up there. Hostess went through 2 bankruptcies and 6 CEOs in the past decade. They went on an acquisition spree, bought a load of their own stock and went in debt to do it. Then they laid off half their people. The union agreed to big concessions at each step along the way. During the second bankruptcy, Hostess promised to modernize their plants. Instead, they lined the pockets of the CEOs and board. The union realized the company was being run into the ground and dug in.

  Much of what the union rightly worked for in the early days...working conditions, hours..etc...were long ago accomplished and codified into employment laws.

Those laws can be changed.

Re:What happems

[ChatHuant]

So, WTF isn't our US government doing it best to try to fight this trend.

They are there, after all.....supposedly...to fight for our interests above all other countries.

Why don't we fight anymore to try to fucking win??

I think you're a bit confused about whose interests the government is fighting for; it's only "our interests above all other countries", if you define "our" as pretty much overlapping with the one percenters. Most of the moves the US government made in the last 20 or more years have been very beneficial to the richest Americans, and neutral or harmful to the rest (just look at the evolution of the inequality index in the USA). The first to be affected were blue collar workers and the really poor, but the process continues, and the impact on the middle class in the USA is growing and I believe will do so for the foreseeable future.

The big losers in this are the middle classes in the developed countries (especially the USA). The US rich are doing great, as they have the US government fighting for them, and, interestingly, workers in other countries have gained quite a bit from the US policies. With the relaxation in trade and regulations, the lot of the average worker in China, Vietnam or some of the Eastern European countries (or even places like Bangladesh) has improved considerably. Of course, long term the economy is not a zero sum game, but short term, the increase of the quality of life for the average Chinese or Vietnamese comes at the expense of stagnant salaries, trade deficits and growing unemployment in the developed world.
 
So most people on Slashdot should expect their income to grow slowly (if not remain stagnant or even go down) during their lifetime, as globalization forces the worldwide equalization of incomes - which equalization will, for basic economic reasons, happen close to the lower end of the income spectrum. I expect the whole global economy will eventually grow enough for middle class incomes to get back to what the developed countries have enjoyed until recently, but i'm afraid for most of us it may be a rather long time.

If that is what you call symbolic what is reality?

[h4rr4r]

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.

Re:The USA exports labor because of unnecessary co

[Anonymous Coward]

Cheaper labor doesn't get you the same amount or quality of work. Replacing one coder with three coders 12 timezones away doesn't get the job done 3 times faster either.

Re:The USA exports labor because of unnecessary co

[Krneki]

Yet those laws made everyone's life better and increased the buying power.

Who are you going to sell your goods if no one has enough money to buy fancy stuff?

So explain the Costco story then?

[SmallFurryCreature]

If high wages are such a problem, how come Costco can do it?

Wallstreet doesn't like it, they want Costco to lower the wages to the minimum to maximize short-term profits because just growing and making a decent profit ain't enough for shareholders... except Costco shares have gone up despite warnings from Wallstreet.

Wallstreet loves to squeeze everything to generate the max profit for shareholders this quarter... next quarter? They will will find another company to squeeze.

IBM can well outsource all the work but what happens to the knowledge? What stops an Indian company hiring IBM workers and creating Indian Business Machines? That is after all what Japan did with car production? First you make the parts, then you put the parts together and then you make your own parts and put them together and how is Detroit doing again?

Americans love blaming unions but North-West european countries (UK does not count) have strong unions and no problems with them. The Dutch Polder model was widely praised until right-wing POLITICIANS destroyed it, much to the chagrin of the supposed right wing business owners who just want to make a deal they can count them even if it costs a bit because uncertainty is WORSE for business then knowing a deal is going to cost you a fraction of a percent more in salaries.

The US needs to get over its love for Wallstreet, it is a leech and NOT a job creator.

You know the really funny thing? In Season 22 of the Simpsons we learn that he makes 70k a year... yet he is often shown in the series as a "poor" man who can't afford health care... 70k that is what its writers consider a low wage on which you can barely survive and are always struggling.

It shows you just how big the divide is. Wallmart workers make 24k a year if they are lucky. Costco make 50k. Both companies turn a profit. Which one do you shop at?

Re:News flash, US

[HarrySquatter]

As opposed to the CEO who pulls in $1.5 million after her pay doubled along with her $3.5 million cash incentive target? Maybe she should be taking a paycut first?

Re:News flash, US

[nedlohs]

90% of Americans have a personal income of less than $80K/year. So no, you have to be pretty rich to think $80K/year isn't good money.

Yes - maybe.

[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're headed for not a very good place in the US - for the average person. The 1% elite (sorry about the '1%' but it's a quick approximation of who I'm talking about) who have money all over the World will do very well and hence; the rich will get even richer.

Am I advocating protectionism? NFW!

Do I have a solution? Nope - I'm not smart enough. I'm just smart enough to see that the economic groupthink is wrong - at least for a few decades. Maybe in a 100 years, we'll all be living at standards that will make Bill gates look like a pauper, but until then, we're headed for some troubling times.

Re:Yes - maybe.

[MyLongNickName]

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.

[ranton]

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:Yes - maybe.

[tgd]

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't been massive reductions in the costs of producing much of what its population consumes through automation, miniaturization, computing, etc.

The only way to make everyone live a "western" lifestyle is to reduce the costs of everything we consume in the west such that the economic power the rest of the world has can afford it -- you can't magically make everyone able to consume resources and productivity at the same rate as people do in "western" societies. I can buy a pretty nice flatscreen for a mornings' worth of work. If the global average wage's "mornings worth of work" is, say, $10... for everyone to be able to do that, you need to be able to process resources and labor from the ground to their house at that price... effectively getting the man-hours of labor to build a TV from the rawest of materials to the house down to four hours of work.

The economy, globally, depends on poverty to maintain growth. The only way you'll ever change that is to get off the planet so we're not resource constrained, and have nano-scale manufacturing that utilizes effectively no human resources, and virtually no energy resources. Otherwise its a complete fantasy to think US standards of living can ever rise again unless a lot more people either decide to be happy in crushing poverty or are forced into it.

Re:Yes - maybe.

[swillden]

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.

Re:News flash, US

[afidel]

The median wage in NYC is $35k, anyone who looks down on 230% of the median wage is an entitled fool.

Re:Product Quality change?

[Anonymous Coward]

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.

Re:What happens

[Ngarrang]

My answer has the potential to come off as a troll, but here goes: socialism.

The political elite don't care as long as the lazy, poor and retired continue to the vote them back into power. Screw the working class that is currently paying taxes.

It is a short-sighted view that cause harm to everyone in the end.