December 15, 2003
USA Today Marketplace/Money
AP (Associated Press)ARMONK, NY — International Business Machines (IBM) plans to move up to several thousand skilled software jobs from the United States to India, China and other countries, which could amount to one of the biggest such actions yet in the technology industry.
IBM documents obtained by The Wall Street Journal said about 4,700 programming jobs could be shifted overseas to save costs, a growing high-tech industry trend known as "offshoring". More, than 900 people are already scheduled to be told of the move in the first half of 2004, while another 3,700 jobs have been identified as having the "potential to move offshore", the Journal said. IBM already has hired 500 engineers in India to take on some of the work that will be moved, the newspaper reported.
The division affected is IBM's Application Management Services group, part of Big Blue's huge technology services division. The IBM facilities, where workers could be replaced, include offices in Dallas, Southbury, Conn., Poughkeepsie, N.Y., Raleigh, N.C. and Boulder, Colo.
IBM spokesman James Sciales said he would not comment on "internal presentations", but noted that most of IBM's workforce, which now totals 315,000, has been overseas for years. Sciales also released a statement saying IBM expects that hiring in the United States next year will match or exceed 2003 levels.
While companies long ago began moving manufacturing jobs and other blue-collar work to Asia, big business is now increasingly shifting skilled work there, as well. According to International Data Corp., foreign workers performed about 5% of information technology services for American companies this year, but by 2007 that share will grow to 23%. Often the American workers being replaced are called upon to train their overseas replacements. The same will be expected of IBM employees, whose jobs are being transferred, according to the Journal.
In a speech this fall IBM chief Sam Palmisano defended the practice of going to Asian countries for skilled labor, saying those nations not only offer lower wages, but also have invested heavily in education and modern communications networks. He said the United States should respond with increased investments of its own to remain innovative. "China, India, South Korea and other rapidly developing nations are replicating the structural advantages that historically have made the U.S. the center of innovation", Palmisano told the Council on Competitiveness in Washington on Oct. 30. "We can't — shouldn't — regret improvements in other nations' competitiveness. Their people deserve to participate fully in the benefits of innovations."
IBM shares were down 60 cents to close at $92.11 on the New York Stock Exchange.