Strategic CIO // IT Strategy
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10/17/2006
12:05 PM
Paul McDougall
Paul McDougall
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IBM's Global Ambition Draws Fire From U.S. Workers

One of the tech industry's true heavyweights, IBM is the very definition of a multinational corporation. Its operations span the globe, and it's committed to building out its workforce in emerging countries like India and China. But there's growing evidence that the company's U.S. workers are feeling left behind, and that can't be good for IBM or its customers.

One of the tech industry's true heavyweights, IBM is the very definition of a multinational corporation. Its operations span the globe, and it's committed to building out its workforce in emerging countries like India and China. But there's growing evidence that the company's U.S. workers are feeling left behind, and that can't be good for IBM or its customers.In rough numbers, IBM employs about 300,000 workers. About half are scattered across the U.S. in sites ranging from Poughkeepsie, NY, to San Jose, California. The rest are in Europe, Asia, South America, and a few other parts of the globe. But if present trends continue, that 50/50 split will be a thing of the past in a few years. In India alone, the company could have more than 50,000 workers by 2007, and IBM is also investing heavily in China.

These are steps that IBM needs to take. Virtually all major U.S. corporations, not just tech vendors, are looking to Asia for both low-cost labor and millions of new customers. Business is now a global playing field, and companies that don't operate globally will be out of business. Heck, even some SMBs are using the Internet to establish a presence in other countries.

But IBM's global employment strategy carries some big risks. It's an American company, and American workers are still its lifeblood. If enough talented U.S.-based IBMers feel there's no longer any job security with the company and begin looking elsewhere, IBM will be in big trouble. Manufacturing, research and development, and customer service would all surely suffer if IBM sees a mass exodus of its best and brightest.

There are already numerous signs of worker unrest at IBM. Posters on an Internet board maintained by a group attempting to unionize IBM workers all sound increasingly pessimistic about their prospects at the company.

Some are openly hostile. "How long until critical mass is reached and there are not enough employees left to fire in order to make sure there is enough money left to pay all those outrageous high level executives salaries?" asks one anonymous poster at Alliance@IBM.org, after the group recently disclosed an IBM plan to cut 400 U.S. jobs.

Another poster, writing under the handle "Keep IBM in the USA," recommends this course of action for workers whose jobs are outsourced: "They said you have 30 days before you are laid off and you have to train an Indian in Bangalore? I'd give Sammy the middle finger salute and tell him to kiss my ass."

Wonder if that made it into the corporate suggestion box.

IBM is in a tough spot. It needs to continue its global expansion if it's to remain competitive with offshore, low-cost IT vendors like Wipro, TCS, and Infosys. But it must also retain the trust and goodwill of the U.S. workers that still account for about half its payroll and perform some of its most critical work.

IBM CEO Sam Palmisano was paid more than $10 million last year. To prove he's worth it, he's got to find a way to balance the company's need to aggressively build out its international workforce while ensuring tranquility on the home front. That, more than gaining a few points of margin here and there, is the task that matters most to IBM's long-term prosperity. It won't be easy, but that's why they pay him the big bucks.

Are you an American IT worker--at IBM or elsewhere--concerned about offshoring? If so, how's it affecting your job performance and the performance of your colleagues? Drop me a confidential e-mail at paulmcd@cmp.com and let me know.

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