IBM and Outsourcing.

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January 14, 2008

SouthAmerica: Americans are so confused these days that IBM reports that there is solid earnings in the pipeline and the market react by going up 150 points.

If you read this entire thread you would realize that great earnings for a company such as IBM it is not good for the rest of the companies operating in the United States since today IBM is the outsourcer on steroids – the main business of IBM it is to export good paying American jobs.

Few people make money when the Dow goes up 150 points and thousands and thousands of people will lose their jobs; as these jobs are being exported by IBM to foreign lands….



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Stocks Rally on Robust IBM Results
Monday January 14, 1:25 pm ET
By Leslie Wines, AP Business Writer
The Associated Press

Wall Street Advances Sharply After IBM Earnings Forecast Lifts Hopes for Earnings Season

NEW YORK (AP) -- Wall Street advanced sharply Monday, with solid preliminary results from IBM encouraging investors to go back into the stock market after last week's rout.

International Business Machines Corp., one of the 30 Dow Jones industrials, released preliminary earnings estimates for the fourth quarter that were 24 percent above year-earlier levels. The results also beat the forecast of analysts surveyed by Thomson Financial.

After falling nearly 250 points on Friday, the Dow rose more than 120 points Monday….


Source: http://biz.yahoo.com/ap/080114/wall_street.html
 
Quote from southamerica:

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today IBM is the outsourcer on steroids – the main business of IBM it is to export good paying American jobs.
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The IBM Stats:
1998: 500 jobs outsourced
2006: 50,000 jobs outsourced
100-fold increase.
 
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syswizard: The IBM Stats:
1998: 500 jobs outsourced
2006: 50,000 jobs outsourced
100-fold increase.


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January 14, 2008

SouthAmerica: These jobs that you mentioned above are just a drop in the bucket; the real impact of IBM’s outsourcing power can be estimated to be in the millions of jobs.

IBM has its foot inside most major corporations operating in the United States, and IBM can help these companies transfer millions of good paying jobs from the United States to foreign lands.

By the way, countries such as India are becoming so important to IBM that their last annual shareholders meeting was transferred for the first time from New York state to India.

For IBM the United States has become only its hunting ground; a place where they can take millions of jobs and transfer it to foreign lands including India.

You can read on this thread the deal that IBM had with Proctor and Gamble and then multiply that deal hundred of times over.

Today, IBM reminds me of Ross Perot when he said: "when you hear that sucking sound of jobs moving away from the US economy" – but this time around it is not NAFTA – it is IBM the outsourcer on steroids.

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Quote from eusdaiki:


good call ftraderdragon, it'll be very difficult to outsource lawyers since A. they bite, and B. they basically do paper work at court houses for you [dealing with beaurocracy is a big chunk of their bussiness ] and I don't think any judge is going to approve to a teleconference trail anytime soon.
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You're very clueless. Legal is already being outsourced. So are high-end Research & Development jobs.

You can use big media rhetoric all you want, but the facts speak for themselves. Deteriorating dollar, growing deficit, growing debt, stagnant wages, stagnant labor market, increasing poverty, increasing welfare state. Tariff & protectionisms seem to have worked well for USA before, as well as Japan. Instead, tax incentives are given to corporations who offshore.

BTW, specialization is for insects.
 
Quote from Hydroblunt:

You're very clueless. Legal is already being outsourced. So are high-end Research & Development jobs.

You can use big media rhetoric all you want, but the facts speak for themselves. Deteriorating dollar, growing deficit, growing debt, stagnant wages, stagnant labor market, increasing poverty, increasing welfare state. Tariff & protectionisms seem to have worked well for USA before, as well as Japan. Instead, tax incentives are given to corporations who offshore.

BTW, specialization is for insects.
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Legal? That's a surprise.
R&D, I knew about that [I have one of those outsourced R&D jobs ;)]


Protectionism. Only leads to lazy uncompetitive local companies, it happened in India, all over Latin America and it's happening to American car manufacturers. It seems like a good idea in the short run, but in the long run you pay a high price efficiency wise.


Outsourcing will continue to be the rule as long as the US continues to reject immigrants. If you search your history books, you'll see that the US is a country of immigrants, it became a great economy thanks to the combined skill of the millions of people who entered in the 19th and 20th century. In the later part of the 20th you started rejecting immigrants, making people illegal and other such nonsense. By applying "protectionism"to the American job market, you made it less competitive. If companies don't find competitive labor in the US, they'll go off-shore. If you enforce protectionism to prevent companies from outsourcing then US companies become less competitive every day.
 
Quote from mgabriel01:

the profits still come home though
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The profits go right into the CEO's pocket, while thousands of American employees are fired and replaced by cheaper foreign workers. It's great for the company in the short run, but once these workers have no jobs and no money, who is going to buy the products the companies are selling?
 
The problem with IT is that much of it is basically relatively low-skilled labor, little different than assembling a widget in a factory. We've just kind of grown accustomed to thinking of any kind of "computer work" as highly skilled labor, but that simply isn't true. Much of it is easy stuff, and now that basic computer skills are becoming ubiquitous there is less need for a lot of the lower-end IT people and it no longer makes sense to pay high wages to those people because the value of their skills simply aren't worth the high wage. The American job would disappear either way, because it just isn't worth it to pay someone 50 dollars an hour to install software, backup databases, or code up a simple ASP page, etc... It still may be worth it to pay someone 5 bucks an hour, and that is why the Indian can get a job doing that stuff, but soon it won't even be worth that much.

As basic computer skills become even more common, and software/hardware becomes even more easy to use and maintain, and secure many of the IT jobs are going to dissapear all together, whether there is foreign outsourcing or not. Technological improvements are going to make most of the basic IT jobs obsolete.

Here's an example from my own business: We used to have an "IT guy" who administered our servers and our databases, installed hardware, etc... We laid him off because basically the rest of us could all do all of the same stuff ourselves. Sure it was convenient to have him around, but not essential and not worth what it cost to pay him.

Although It sucks having to do basic computer "chores" myself, like when I had figure out how to connect to the VPN myself, and I hated installing a ram upgrade in my laptop myself, it saves us a lot of money not having a full-time staff person to do the basic computer work that everyone knows how to do, or can figure out on their own. With the money we're saving, we hired another talented guy to work in actual product development. So now we have another creative person who is building stuff that we can actually sell, instead of just maintaining our own infrastructure.

For several years we have been hosting our public websites at hosting companies, because they are far more reliable than we could ever make our own servers. Currently though most of the software we use internally accesses our own servers. By the end of this summer I'm going to have all of our internal software rewritten as web applications, at that point I won't need to have our own servers anymore. I will host all of our internal tool set remotely as well, just like our public web site. I can rent server space for years, and it would still be less than what we paid for just one of the servers in our server room. At that point, I'll be able to "fire" my server, my switches, and routers too. So, I'll never need to hire someone to admin my infrastructure again, that will be "outsourced" to a hosting company, which can take advantage of economies of scale.

We never could have done that when we started our the business ten years ago. What has made it possible is technological changes such as much faster internet connections, better remote administrative tools, better off the shelf software and better programming api's that allow everything we used to do on the desktop now be done in a web app.

Stuff like this will happen with or without foreign outsourcing. And the low-skilled IT jobs will disappear. There will always be demand for the highly-skilled creative IT work, and it will always be expensive to hire real talent no matter what continent that talent lives on.
 
the earth is getting flatter. the economy is global. it's inevitable. protectionism will not work.

corporations have to enhance shareholder value. if I am on the board, I'd vote for outsourcing also.

if you cant compete in the global economy, tough shit. life is tough, so get used to it. or get trained with new skills.
 
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