And that place is India, as the computer firm discards 13,000 jobs in the United States and Europe.
The Washington Alliance of Technology Workers gave the New York Times an internal IBM document on Indian employment. An IBM employee concerned about the shifting of jobs provided the document, labeled “IBM Confidential,” to WashTech.
One estimate from the McKinsey Global Institute says American companies save 58 cents for every dollar invested outside the country. It’s a figure that US technology companies like IBM and Dell would have to find irresistible, despite the impact their actions have on US workers and the economy.
An IBM executive scoffs at cost savings as a motivating factor behind moves offshore. “People who say this is simply labor arbitrage don’t get it,” senior IBM vice president Robert Moffat said. “It’s mostly about skills.”
And Mr. Moffat said that IBM was hiring people around the world, including many in the United States, in new businesses that the company has marked for growth, even as it trims elsewhere.
Fascinatingly enough, while companies find plenty of cost savings by moving the jobs of workers to low-wage countries, they simply haven’t found a way to outsource the most expensive jobs within a company – those of its executives.
“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.
IBM CEO Sam Palmisano moved up to 86th on Forbes list of total compensation for executives, a leap from 2004’s rating of 125th place. His total compensation for the past five years, three of which where he has been CEO, was over $36 million USD.
David Utter is a staff writer for Murdok covering technology and business. Email him here.
