By Jo Best, 12 March 2004 13:40
NEWS According to government officials, Big Blue has scheduled in a huge rise in its Indian workforce, doubling the number of jobs located in Calcutta to about 4,000.
IBM currently has several thousand staff working in India, with 1,800 in Calcutta, chiefly working in the software development field. According to the Wall Street Journal, government officials said that IBM advised them of the planned expansion.
Unlike other recent rumours that suggested that IBM would be shedding jobs in the US in favour of Indian workers, the latest development will be purely an expansion of the existing workforce. Big Blue isn't just confining its expansion plans to Asia - the company also intends to add an extra 5,000 staff to its workforce in the US.
CSC is also keen to see its workforce in India expanded, with a planned tripling of staff in the country to 5,000.
The logic behind the expansion isn't hard to see - an average computer programmer in India will cost considerably less in wages than a US-based worker. And it's such economic incentives that are making Big Blue's shareholders edgy. Next month will see a vote by shareholders on whether or not to undertake a study into the company's performance-led pay policies, to see if they encourage execs to cut costs by opting for offshore outsourcing.
It's not just shareholders who've got the jitters. Staring down the barrel of a presidential election, US politicians are trying to harness for their own ends the strong feelings created by the Indian jobs boom.
Both George Bush and his rival John Kerry have been whipping up a firestorm of anti-offshoring feeling to get voters on their side. Kerry levelled heavy criticism at short-sighted CEOs sending jobs abroad and added he would "tear every page from the tax code'' to stop it happening, while Bush said he was "concerned" about the issue, but rejected an isolationist stance.
However, that didn't stop the passing last week of a bill to block federal government contracts being given to overseas companies.
Comments
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1. Carl Maycock
Familiar stance by American politicians.
Western countries benefit vastly from globalization and preach of the benefits to poorer countries to be integrated into a global economies. That is until part of the global pie has to be shared with these poorer countries. This hypocrisy does not benefit the global economy. A programmer friend of mine spent six months in India and was amazed at the level of programming knowledge there and felt quite humbled. Ultimately quality is what matters and if IBM get lower costs with high quality code then isn't that a sound commercial proposal ?
2. H Rae
Carl, I'd say it would the same stance by any reasonable politician in any country (Bush aside 'cause he is not interested in the American worker, only what's in his own pockets and what he is able stuff into his buddies' pockets).
Jumping on the India-bandwagon includes more than just programming jobs. Call centres and other customer service departments have also moved there. A friend works for a big US company with a call centre in India and their customers are furious. They would much rather talk to a native English speaker. So what... the company saves a few bucks and the shareholders make more money... I mean that's the bottom line right?
Soon, as the the gap between the poor and rich widen even further due to job loss, we'll have the rich 10% having their Oscar parties and the rest fighting for a few miserable jobs 'cause not everyone can be a doctor or an Oscar winning actor.
Anyone with any brains can see the dangers here. You say "global pie has to be shared with these poorer countries". Sure but are you prepared to take a 50% paycut while the government raises your taxes with another 5% to cater for your social security? I am not prepared to share my pie because my pie has already gotten smaller and I have children to raise.
If you are willing to share your pie why don't you take you money and go to India and help the millions of poor people there? That is a much better solution.
3. Carl Maycock
H Rae I understand your viewpoint and I think it is one that is shared by many. The problem is that all of us benefit from foreign markets without really knowing about it. It is a disparity that most people choose to ignore. The decision by IBM is a sound commercial proposal that benefits all. We may lose out on certain jobs but we also gain from the reduced costs in general as companies running costs decrease. After all we all enjoy a vastly better life in the west compared to places such as India. Also the decision by IBM isn't just about money. The quality of code that will be produced will be every bit as good as in America or where ever, if not better. This is what globalization is about. If you don't agree with globalization then your must be advacating an insular economy. That doesn't benefit anyone. Your job is not as important as the bigger picture. It's a hard fact to accept but true. You cannot have your cake and eat it!
4. H Rae
I don't believe it for second that the level of computer programming is higher in India than it is in the USA. It is all about money at IBM, an American company that introduced its own computer back in 1952/3. What were the Indians doing back in 1950's?
Anyway luckily Australia's economy grew at nearly 4% in 2003, which happens to be the highest rate in the OECD and jobs are abundant. Plus Australia is probably the most friendly country to setup small businesses. So I'll be eating my cake - don't know about you though.
Globalisation is good until money hungry shareholders demand that jobs are moved to India. I think IBM has responsibilities to keep jobs and high-tech development in the USA. Luckily for the US they are planning a Anti-offshoring bill.
5. Carl Maycock
If the code produced by Indian programmers I'm sure IBM wouldn't outsource. They are bound by high service levels to their customers. You may say that if they do outsource the quality would degrade. The superiority of America is based mostly upon finance not intrinsic quality of produce (not assuming American produce is low quality either). You seem to be advocating an environment of either 'us' or 'them'. Surely by working together we can create benefits for all not just the wealthy nations who need it least. At some point globalization will force hard decisions to be made. Most of the South American countries walked out of the WTO talks last year based upon this blatant disparity between trading nations. I'm not advocating a belief system to anyone just more equality.
6. anonymous
People like H Rae should know more about the current open world market,
not 1950s. I am an Indian living in the UK for the past 4 years working for the Telecom giant Ericsson for the past 5 years overall in India and UK. There are lots of such engineers like me because of whom the fortune 500 companies benefit from. Many people know less about India. We got problems there but at the same time lot of talent which is wisely used by western world all these years. No problem as a result we also got benefits... Before pointing badly about India, don't forget that thousands of companies in US silican valley are owned by Indians, they contribute a lot to US economy and the same case with UK as well. One final thing is, we do lot of hard work during our higher education and thus have strong foundation skills and do lot better work than others...
And quality??? out of probably 50 SEI CMM Level 5 companies of the world 40 are Indian companies...enough?
***It's unwise to brand India a 3rd world country with 1 billion people***