I’m (Not) an IBMer Anymore

IBM NotI came across a tweet the other night that pointed me to a discussion on the EE Times forum regarding an editorial by Mark LaPedus a few weeks ago. The editorial states that “IBM Corp. has cut nearly 10,000 jobs this year, according to reports, although Big Blue still refuses to fess up to most of the layoffs.” Although IBM denies the reports and claims they are fabrications by union officials, the editorial adds fuel to the fire by stating that “for some time, the union has charged that IBM is cutting and outsourcing U.S. jobs, while quietly hiring in India.”

The comments in the discussion thread are very interesting and worth reading through. If you don’t have time, here’s a synopsis of the various opinions offered there:

  • We are in a jobless recovery and IBM is not the only company moving jobs offshore.
  • IBM is a corporation and their only obligation is to their shareholders. Outsourcing to India makes business sense so that is what they need to do.
  • “The sole function of a union is to keep their own jobs and breed a sense of entitlement and proliferate mediocrity.”
  • If it’s in the national interest to keep jobs and fabs here, then public funds should fund them.
  • Instead of blaming IBM, consider the high taxes and burdensome laws that favor outsourcing over keeping jobs in the US.
  • If you think IBM is doing the right thing, just wait till it’s your job being outsourced.
  • If this kind of off-shoring continues, we will wipe out the technological advantage we have in the US and you’ll need to move to another country to get a job.
  • Outsourcing “delivers worse results at lower costs”, and that’s what businesses want right now.
  • We, as consumers, are more concerned about the low prices we get at Walmart than the notion of “social justice.”
  • Instead of laying people off, cut out the big executive bonuses and perks.
  • Companies need to take care of all three groups - employees, customers, and shareholders. Otherwise employees can quit, customers can stop buying, and shareholders can sell.
  • Do companies owe anything to the communities where they are located or to the nations where they are headquartered?
  • Yes, they owe taxes!

Personally, I can see both sides, but what do you think? I’m especially interested to hear from any company execs who have decided against outsourcing and why that is.

harry the ASIC guy

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8 Responses to “I’m (Not) an IBMer Anymore”

  1. Dustin Says:


    I can agree with you that I see both sides of this “social coin”. Personally as an EE I am biased towards the social need for a company to be obligated to it’s community to provide jobs.
    You hit a nerve with me about taxation: that’s a problem for large companies, and I find it humorous that government officials claim they have “patriotic motives” yet won’t do the simple thing and change “laws” to provide a logical alternative for companies job sources. Essentially, make it easier for companies to WANT to keep jobs in the US.


  2. Jeremy Ralph Says:

    I had no idea IBM had a union and it’s Interesting to learn that. Does it include engineers too?

    Certainly India has some top quality engineers and there is a business case for hiring there. Globalization is a force that no short-sighted union or govn’t protectionist policy can stop. The demographics of N.American baby boomers, lack of youth interest in engineering, and the growing middle class in emerging economies will set the stage. And let’s not forget that new revenue from India likely represents a huge growth market for IBM.

    The best way for N.American engineers to compete, in my view, is to differentiate themselves in terms of specialization, competence, innovation, and productivity. This can be achieved without protectionism. Tax credits for investment in local ventures, improved maths & science focus in education, R&D/innovation incentives, and enhanced infrastructure are ways that govn’t can help.

    Here is an interesting EETimes article from a few years ago about how western Canada is competitive with China & India on a cost per engineer basis:

  3. Lou Covey Says:

    Harry, Got started writing a response and couldn’t fit it all in, so I made the full comment at http://commbasics.typepad.com/my_weblog/2009/09/were-in-this-boat-together-start-acting-like-it.html. Basically, we all created this situation with short-term thinking and an attitude of entitlement. If we overcome those two downfalls we can turn this around.

  4. Steve Meier Says:

    Any large company like IBM, HP, Intel, Google must develop a global competency as it is the next stage of economic development and is the new competitive playing field. Smaller companies have more of a choice to make and have more risk involved, and in the short term there are ample US engineers available. Some companies like TI have a very large international team and have built to a successful organization. Others like Intel have had mixed success in India, yet great contributions in Israel. Google is developing Wave in Australia.

    For any new, breaking, time critical innovation it was always better to base in Silicon Valley as the physical presence at HQ and the experience level just moves at light speed. So, US based, Silicon Valley engineers have a huge advantage, and it’s not going away. Perhaps you need to move into a new domain, but there will be plenty of opportunities for valley engineering talent.

    I had a mixed experience along the lines of “Mythical Man Month”. On the positive side there is good talent, though young and inexperienced, after some training support and management care they can contribute meaningfully on core projects, on the negative side the high turnover rate reduced the efficiency.

    As with any resource be clear about the trade-offs. First off, what is your goal ? Is it ‘cost savings”, or “global talent pool”, “customer/market proximity”.

    For a “cost savings” goal, it’s a myth. In my experience there is not really an advantage, definitely not over the short term. Initially you will be training and putting an overhead on your US based team so you go deeply into the red for at least the first 2 years. Secondly be keenly aware that the cost differentials will narrow over time, the salary budget as a % increase will need to be larger to keep up with a higher salary inflation rate, also make sure this is agreed to by your management ahead of time.

    For “global talent pool”, it is a more realistic and strategic goal. The US is graduating a small percentage of the world engineer’s and with increasing limits on immigration the only way to access the larger pool is with remote sites. Tapping into this talent pool is an important fact for any larger firm as there are just not enough US engineers in boom times to fill out the ranks.

    For “customer proximity”, at least in Bangalore, there is a trend of many design companies basing teams there and then co-location with customer and AE’s helps support effective collaboration especially given the time differences. Not to mention the key Universities like IIT who are pumping out fresh engineers who you will want to hire. So for customer and/or market / government and university proximity it becomes a strategic differentiator. Quickly the same will be true in China.

    On the negative side the turnover rate in both India and China was much higher than US, and with the overhead that it puts on the US it may not yield an overall positive ROI. In complex software it takes at least 12 months to get productive and the most valuable talent has 2-3 years under their belt. If you invest and then you lose the engineer in the next 1-2 years then it’s not worth your while and you are only training engineers for your competition and exposing your IP. Your competition knows this and will eagerly setup shop next door and raid your talent.

    Also don’t fall for the myth that you can offload bug fixes and support as these cultures are ‘fad’ trendy and always want to work on the latest hot thing,( read “Crossing the Chasm”), so if you setup an overseas group this way you won’t get any quality or team stability.

    Leadership is a key aspect. Work to find a US based leader in your group, who has the cultural background, will travel several times a year and is motivated and excited about the challenge and opportunity, and has the relationships with their peer leaders in US so that trust and communication stays open. And be prepared to back them up with your ‘virtual’ presence at least quarterly, and physical presence at least annually.

    When considering a geography consider the cultural attributes and how to leverage them. India is an innovation and risk taking culture, so they will thrive with new ground breaking projects and won’t be bothering with pesky business feasibility questions. They are key assets for early prototyping yet may not have the architecture and quality emphasis. China has a strong culture of quality and you can hire engineers to perform SQA which you cannot find talent or interest for in the US.

  5. Sean Murphy Says:

    A couple of interesting posts on Bob Cringely’s blog:

    For a company whose motto used to be “think,” IBM is trying to reduce it to “do as instructed.” http://www.cringely.com/2009/09/logans-run/

    What happened two years ago was IBM deciding to move most of its jobs offshore to save money after a sobering look at the life cycle cost of its U.S, workers. If you look at the total future cost of an American employee for the next 15 years — it is a pretty big number. Then add the double digit inflation cost of U.S. health care and that number becomes bigger still. The only way companies like IBM see themselves being able to continue to operate is by cutting retirement benefits and/or shipping jobs off shore. In IBM’s case they are doing both.


  6. Paul Simon Says:

    I came to the US from India for an MS and then H-1, Greencard and citizen and then got outsourced, went back to India etc etc. Globalization is a hoax. I would advise people to read ‘Wealth and Democracy’ by Kevin Philips. He is a reputed Economist and not some kind of crackpot conspiracy theorist. He examines the rise and fall of nation states in this book and very convincingly outs the shennanigans that the upper rich class play on the rest of us. He talks of the ‘cycle of credulence’ that is leveraged very ably by these people to maximize profits and aggrandisement of wealth. The bottom line is not to suggest a secret cabal but a group of self-serving class of people whose motive is profit pure and simple - these people know no nation or boundary and they dont care. I see a lot of well meaning folks here who talk of Corporations and responsibility to share holders like as if its some sort of 11th commandment handed down by the Almighty never to be questioned - its all crap. We live in nations and countries guys or to put it another way, we live in well defined societies or social structures - the world the last time I looked was not one monolithic social structure - so the rules are written differently for each nation state (pls dont talk to me about the WTO - thats a different ball game) and this means that we should never allow Corporations to merely exploit differences that exist in cost of living to make a quick buck. In the rest of the World, corporations are not taken as seriously and as Gosh Gospel Truth as it is in the USofA. Shareholders and shareholder wealth seems to be another sacrament here - no one questions the fact of who are the people who own the most shares in terms of percentages - this is a game that has gotten convoluted due to Hedge funds and Mutual Funds - but scratch the surface and you will indeed find out that the maximum holdings are held by the top 1-5% of the wealth owners in the country - the stock market is not as diverse as people want to think - nope.

  7. Pathik Says:

    Let me explain to you the Indian scenario. Here in India IBM, Accenture, Computer Sciences Corp etc all offer the same job profile and same salary to fresh Bachelors in Engineering recruited by them.
    The salary offered here is Rs. 300,000 per year or about $6000 per year. So you can see the difference of cost incurred to IBM when hiring in US and India. An employee working in US has to be paid almost 10 times as compared to employee in India, while both are performing quite similar functions.
    A common trend set by these IT companies is that they have their top management in the Silicon Valley and all other jobs are outsourced to countries where engineers can be hired cheaply.
    Overall, I wouldn’t blame IBM completely because in such a capitalist world where profits are sole motive and welfare is set aside… it leaves such companies with no other choice.

  8. Blog Review: Sept. 23 | System-Level Design Says:

    […] Harry Gries, aka the ASIC guy, stumbled onto a very interesting thread about IBM layoffs, outsourcing, globalization and all sorts of important business considerations that we all need to be thinking about. It’s an interesting read, and it all stems from a story written by Mark LaPedus at EETimes. Thanks for the abbreviated version, Harry. […]

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