IBM, Microsoft, And The Myth Of 'Our Jobs'

Posted by Bob Evans on Jun 5, 2009 12:55 PM

Emboldened by President Obama's desire to punish global corporations for employing workers outside the U.S., the nativists are screeching once again about the ongoing threat to "our jobs." But that begs the question of just what exactly "our jobs" are: with 70% of IBM's employees based outside the U.S., and 40% of Microsoft's outside the U.S., just whose jobs are they anyway?

I'm asking these questions because from the piles of letters and comments that come in after every blog or column about outsourcing, offshoring, and the current administration's tendencies toward protectionism, it's clear that many IT professionals here in the U.S. are stuck in their misguided belief that because certain types of jobs were once plentiful and high-paying, then they will always be plentiful and high-paying.

Would it be nice if that were the case? Sure it would. Is that the case? No it's not. Is it productive to cling to the belief that these are "our jobs" and that the government somehow needs to protect them for us? No it's not. Quite the contrary – it is destructive and delusional. Businesses change, industries change, products and strategies change, old companies go away and new companies rush in – and as a consequence of that, jobs change as well.

That job evolution includes responsibilities (anybody know any MIS managers?), pay scales, interaction with other departments (anybody lay any COBOL talk on the CFO lately?), engagement with outsourcers, and geographic bases for those jobs. This is not a crush-the-little-man conspiracy, it is not a foreign trap to overrun the U.S., and it is not unusual: it is merely the latest in an ongoing series of upheavals that is as much a part of capitalism as raises, bonuses, promotions, and career advancement.

As Exhibit A, let me introduce the IBM Corporation, which employs 398,455 workers around the world and does business in 170 countries. As of the end of 2008, IBM employed 120,227 workers in the U.S., which means that at the end of last year it employed 278,227 workers *outside* of the U.S. Think about that: IBM has more than twice as many workers outside the U.S. as it does inside the U.S.

Given that makeup of its employees' locations, and the fact that it does business in 170 countries around the world, I think it would be more accurate to say that IBM is a global corporation that happens to be based in the United States, rather than it is a U.S. company with overseas subsidiaries. Because it's that latter description – the old, traditional, and largely inaccurate one – that fosters the ongoing but misguided sense of "our jobs" at "our companies" in "our industries."

Then there's Microsoft: its website says that as of April 21, it had 95,029 employees, with 56,552 in the U.S. and 38,477 outside the U.S. It also says that as of mid-February, the company had subsidiaries in 107 different countries or regions around the world, including Macedonia, Malta, and Mauritius.

The structure of the business maps to the revenue opportunities, and here in the 21st century those opportunities are global. Sure, the U.S. is still a huge market, but as we've discussed in Global CIO before, many big U.S. corporations generate 40% or more of their revenues from outside the U.S. so why in the name of free-market capitalism would they not conduct a proportionate share of their business all around the world?

And if the Obama administration wants to try to punish companies like IBM and Microsoft for doing business overseas and not wanting to pay double taxes on the profits they earn overseas, then it had better be ready to see them move more and more jobs out of the U.S. because the punitive cost of doing business here is just being pushed too high. It had also better be ready to see other countries retaliate with equally harmful protectionist measures of their own, with the combined impact being a drag on the global economy with a resultant negative impact on employment.

And no amount of governmental construction of Rube Goldberg machinery will be confining enough to stop the movement of capital to where it does most good. Just look at those numbers: Microsoft already has 40% of its employees outside the U.S. and CEO Steve Ballmer says he'll crank that number up higher if Obama and the Congress pass legislation that punishes U.S. businesses for being global businesses.

With IBM already having remade itself to where it has 70% of its employees outside the U.S., Ballmer can look at the precedent set by IBM and figure he's still got a whole lot of headroom. And what happens then to more of "our jobs"?

Nobody owns a job except the person who owns the company. The rest of us have to earn that job each day. They are not "our jobs," either by individual or by country or by profession, and the sooner we all learn that, the sooner we'll be able to get our focus back on productive strategies that will continue to make this country and the IT business sources of tremendous growth and innovation in the global economy.