IBM memos detail overseas jobs savings

[cthrumatrix]

IBM memos detail overseas jobs savings
Report: Several thousand positions eyed

Updated: 11:12 a.m. ET Jan. 19, 2004NEW YORK - IBM expects to save $168 million annually starting in 2006 by moving several thousand high-paying programming jobs abroad, according to internal company documents obtained by The Wall Street Journal.


International Business Machines Corp. has said it plans to move up to 3,000 jobs from the United States to developing countries this year. The Journal story did not say how many jobs the company expected to shift overseas starting in 2006.

more

"To suggest what the savings would be in 2006 means you would have to know the number of jobs to be shifted," he said.

The Journal said the documents indicate that for internal IBM accounting purposes, a programmer in China with three to five years of experience would cost about $12.50 an hour, including salary and benefits.

snip

http://www.msnbc.msn.com/id/3999589/

I'm sure Lou Dobbs will have a few words on this! FWIW, the article pointed out the US cost for the programmer above is $56 an hour.

[leesa]

1. I wonder who they expect to sell this stuff to when Americans have

no jobs? Obviously, we are expected to compete with third world countries for wages from now on, but who will BUY it if no one can afford it? Seems rather short-sighted to me.

[cthrumatrix]

2. there has to be some "reform"...you could apply this logic to many

countries and the US would always end up on the short end....we need intervention.

[bearfan454]

3. They will.

They don't care if we don't have any money.

[ramapo]

17. Retrain for retail

The SOTU will reportedly have a section on jobs. Billions to community colleges and the like to retrain the high-tech workers to work retail jobs.

[Rose Siding]

4. It's good to know that someone on the "inside"

will leak stuff like this. A whiff of ethics...Or would the documents have been sold to the paper?

just looking for a silver lining

[tnvision]

5. $56 an hour?

The article pointed out the cost of a US programmer is $56.00 an hour? I know programmers that used to make $200.00 and are lucky to get $20.00 today.

[cthrumatrix]

6. I guess that's IBM "load cost"..benefits etc...(maybe)

[TheDalaiMama]

7. I think this is election year propaganda to help shrub....as soon as

the election is over...and god forbid shrub wins...it will be business as usual...it's odd timing that they come out with this now.

I can imagine the white house cabal working the phones..promising the moon.. if the major corporations show job growth in the USA Inc.

dalai

[kybob]

8. when we blue collars got the coporate shaft.......................

the white collars didn't give a shit, now its their turn to squirm. and with McDonalds developing robotic hamburger flippers, good luck suckers heh heh heh heh!!!

[Pale_Rider]

10. Its the pauperization ...

... of America as the middle class is squeezed downwards and the upper classes are firmly entrenched and consolidated in their wealth. Prices for goods and services will not drop for the middle class. "Hey, want fries with that?" will be the mantra of a lucky few.

BTW: Welcome to DU!

[Pale_Rider]

9. For a fairly senior coder ...

... $56 is about right though it depends on the locale. Anyway at the end of the day, it will be the upper managers and executives that will be able to maintain their salaries (> $56 per hour) if they can prove that they can project manage people overseas.

Prepare for crap software from very junior coders in China and India.

"You have error, have a nice day"

[SharonAnn]

22. Project Managers are in India now and for US projects they're

hired in India and then brought to US on L-1 visa.

It's cheaper that way, doncha know?

Of course, since most of what a project manager does is communicate and make decisions based on information received from communication, it will be interesting to see how this actually works.

Anyway, I continue to be astonished that companies actually think this will work. Software development is tough enough and then you add all those "communication" issues - well, it won't be pretty.

[NashVegas]

11. Well ...

I think even that is a bit much.

We got along well without computers for 2,000 years.

56 an hour tied to a 40 hour work week is over 100k a year.

Ask yourself: is the average coder's work more necessary and beneficial to our civilization than the average garbageman's work?

[Skittles]

13. my company bills for at that rate

that is NOT what we are paid

[NashVegas]

19. Fair Enough

I have known independent contractors charging that much.

Depending on the project, that's still likely - even if it's company billing, not individual - more than the value of the work unless you're contracting for NORAD or something similarly crucial.

[newyawker99]

20. Hi tnvision!!

Welcome to DU!! :toast:

[MidwestTransplant]

12. Yes, but if we would only cut regulation on business this wouldn't happen

or so you would read on FR.

[kalian]

14. The macroeconomic theory is...

when viewing "globalization" that companies will start to "roam"
the earth in search of cheaper labor. Not much of a "theory" given
that this has been going on for at least 25 years.
Anyways, eventually those jobs will come back to the US when our
wages are LOWER and "more competitive" to the Chinese, Indian, or
other nation's wages. In essence, it will be a vicious cycle that
eventually the ENTIRE world will suffer.

The curious thing is though: the Japanese have NOT experienced
this phenomenon. Yes, their unemployment numbers have gone up in
the past 12 years but not as dramatically nor as damaging as here in
the US.

Oh well...

[bspence]

15. #1 reason why I'm not in computers

I was going to get a CS degree, but I had a feeling that it was too good to be true. Kids were getting paid WAY too much for what they were giving to a company. Still, I don't like the way IBM is handling this.

[cthrumatrix]

16. it's just that they have been caught and documented...others have

just been doing it...and this makes it "more public'...which is good..let everyone knwo about this

let's get shrubs take on this ...live..no script...frightful.

[ramapo]

18. Wise move

The glory days of computers are past. I'm trying to map my next move.

[54anickel]

21. Lou Dobbs did cover this tonight. And the net jobs staying are only

1500 not the 4500 reported in this article. Lou was great.

Here's the transcript (it's of the whole show):
http://www.cnn.com/TRANSCRIPTS/0401/19/ldt.00.html

Here's some snippets


PETER VILES, CNN CORRESPONDENT (voice-over): IBM says it's good news for the technology industry and good news for the United States. Well, you be the judge. IBM says it will hire 15,000 people this year, but only 4,500 of them in the United States. And it will also shift 3,000 jobs out of the United States for a net gain of 1,500 jobs here. Why hire so many, more than 10,000 overseas? An IBM spokesman says, quote, "we're doing it because there's growth in those areas." He added, quote, "this is pretty good news for us and the industry." John Bauman, a computer programmer who's been out of work for 15 months, doesn't see it that way.

JOHN BAUMAN, THE ORGANIZATION FOR THE RIGHTS OF AMERICAN WORKERS: It's a shame. It's truly a shame. What do we tell our kids in college? Well, go into this field or that field. This is what we were promised. The future is there for us. It's not there anymore.

snip>

VILES: Those internal documents also say it will be the job of human resources and communications people at IBM to sanitize any moves offshore, so it's never portrayed as a movement to cut costs or to export American jobs.

DOBBS: Now, that is absolutely chilling. We know it's going on in a number of companies, a lot of companies.

VILES: Sure.

DOBBS: But for IBM saying it's going to sanitize those expressions and to say something other, using human resources, as human resources of a kind that I'm not familiar with, and instead of communications, it sounds like they mean obfuscation doesn't.

VILES: Yes, well two points here. One IBM does say these are inaccurate, incomplete. These might have been draft memos somewhere within the company. They are not sure what memos the "Journal" is accessing.

DOBBS: The "Wall Street Journal" report. Did they say what was inaccurate because we should (UNINTELLIGIBLE)?

VILES: They did not point by point. They said they don't know which memos.

DOBBS: So they said the entire "Wall Street journal" report was inaccurate?

VILES: The discussions of the memos they said was inaccurate. Another point that should be made, IBM is a very influential company. Smaller companies around this country look to them for guidance in managing personnel, managing issues like this. So this goes beyond IBM. This is a very influential company.

DOBBS: This is the biggest technology company, along with Microsoft, in the world. I want to be clear, we asked Sam Palmisano (ph), the CEO of IBM to join us here tonight, and they declined the opportunity. This is a shame as you say. This is a leader...

VILES: A thought leader.

DOBBS: A thought leader. A behavior -- corporate behavior leader. It's a shame.

[porkrind]

23. FYI

From the "Executive Paywatch" section of the AFLCIO website ...

http://www.aflcio.org/corporateamerica/paywatch/ceou/database.cfm?tkr=IBM&pg=6

PayWatch Fact Sheet

L. Gerstner
Former Chairman and CEO
International Bus. Machines

2002 Compensation
Salary $2,000,000
Bonus $1,500,000
Long-Term Incentive Payoffs $1,542,314
Restricted Stock Awards $12,875,000
Other Compensation $370,465
Value of Stock Option Grants* $0
Total 2002 Compensation Plus Stock Option Grants

$18,287,779
Compensation from Prior Stock Option Grants**
Value of Options Exercised in 2002 $4,713,286
Value of Exercisable Options $147,620,652
Value of Unexercisable Options $0
* 5 percent potential appreciation model as reported in the company's proxy statement.
** Not counted in 2002 compensation totals.
Source: eComp Database - http://www.ecomponline.com

CEO-to-Worker Comparisons
Annual Weekly Daily Hourly Per Minute
L. Gerstner $18,287,779 $351,688 $70,337 $8,792 $146
Minimum-Wage Worker $10,712 $206 $41 $5.15 $0.09
Average Worker $25,501 $490 $98 $12.26 $0.20
President of the U.S.A. $400,000 $7,692 $1,538 $192 $3.21

How Many Years to Equal L. Gerstner's 2002 Compensation?
Minimum-Wage Worker 1707 years Completion Date 3709 A.D.
Average Worker 717 years Completion Date 2719 A.D.
President of the U.S.A. 91 years Completion Date 2093 A.D.

How Many Workers Equal L. Gerstner's Compensation?
Minimum-Wage Worker 1707 workers
Average Worker 717 workers
President of the U.S.A. 91 presidents

[Muddleoftheroad]

24. You won't like this

But by saving $168 million, that is easily over five times the combined numbers you just threw at us.

Top managers make decisions that can save or earn companies millions of dollars in an instant.

[reprobate]

25. Alan Greenspan said it well. Read my sig line.

This is one of the big problems with capitalism as now practiced in the Corporate States of America.

Capitalism was supposed to be a means of gathering the resources to start and keep a business. That purpose has been superceded. It is now almost impossible to start and grow a business that will compete with the biggies. They will not allow this to happen. They'll use their power to kill competition. Want an example? I give you Walmart.

But we have gone beyond capitalism. When business interests are entwined with government, you get corporatism. And that's not only bad for the individual, it's bad for the nation. But then the people will have no say in either business or gov't.

America. First among the third world.