IBM to hire 14,000 in India as it lays off 13,000 in West

Internal memo is leaked to union group in Seattle

June 24, 2005|By NEW YORK TIMES NEWS SERVICE

Even as it proceeds with layoffs of up to 13,000 workers in Europe and the United States, International Business Machines Corp. plans to increase its payroll in India this year by more than 14,000 workers, according to an internal company document.

Those numbers are telling evidence of the continuing globalization of work and the migration of some skilled jobs to low-wage countries like India.

The IBM memo highlights the trend of a rising global labor force in science, engineering and other fields that require advanced education.

To critics, IBM is a leading example of the corporate strategy of shopping the globe for the cheapest labor in a single-minded pursuit of profits, to the detriment of wages, benefits and job security here and in other developed countries.

The company said last month that it would cut 10,000 to 13,000 jobs, about a quarter of them in the United States and the bulk in Western Europe.

"IBM is really pushing this offshore outsourcing to relentlessly cut costs and to export skilled jobs abroad," said Marcus Courtney, president of the Washington Alliance of Technology Workers, or WashTech, a group that seeks to unionize such workers. "The winners are the richest corporations in the world, and American workers lose."

WashTech, based in Seattle and affiliated with the Communications Workers of America, gave the IBM document on Indian employment to The New York Times. It is labeled "IBM Confidential" and dated April 2005.

An IBM employee concerned about the shifting of jobs abroad provided the document to WashTech.

IBM declined to comment on the document or the numbers in it, other than to say that there are many documents, charts and projections generated within the company.

But in an interview, Robert W. Moffat, an IBM senior vice president, attributed the buildup in India to surging demand for technology services in the thriving Indian economy.

Moffat said IBM was making the shift from a classic multinational corporation with separate businesses in many different countries to a truly worldwide company whose work can be divided and parceled out to the most efficient locations.

Cost is part of the calculation, Moffat noted, but typically not the most important consideration. "People who say this is simply labor arbitrage don't get it," he said. "It's mostly about skills."

Moffat says IBM is hiring people around the world, including many in the United States, even as it trims elsewhere. The company's overall employment in the United States has held steady for the last few years, at about 130,000.

IBM is increasingly trying to help its client companies use information technology rather than just selling them the hardware and software.

So IBM researchers and programmers are more and more being put to work for customers, redesigning and automating tasks like procurement, accounting and customer service.

Yet those advanced services projects will be broken into pieces, with different experts in different countries handling a slice.

This emerging globalization of operations, Moffat noted, does lead to a global labor market in certain fields. "You are no longer competing just with the guy down the street, but also with people around the world," he said.

Such competition, however, can become particularly harsh for workers in the West. An experienced software programmer in the United States earning $75,000 a year often can be replaced by an Indian programmer earning about $15,000.

But looking at job numbers alone, said Joseph E. Stiglitz, a Nobel Prize-winning economist and a professor at Columbia, understates the potential problem. "What worries me is that it could have an enormous effect on wages, and that could have a wrenching impact on society," said Stiglitz, a former chief economist of the World Bank.

The fact that globalization anxiety about jobs and wages does not extend to executive ranks has stirred resentment among workers.

"Maybe the shareholders should look offshore for competitive executives who would collect less pay and fewer benefits," said Lee Conrad, national coordinator of the Alliance@IBM, a union-affiliated group that has 6,500 dues-paying members at IBM. "In all this talk of global competitiveness, the burden all falls on the workers."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.