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Big Blue Joins Offshore Parade

January 18

The Wall Street Journal reported today that it had obtained internal IBM documents showing the IT giant expects to save $168 million annually starting in 2006 by shifting several thousand high-paying programming jobs overseas.

This news comes on the heels of information released about a month ago that had IBM moving nearly 5,000 US software jobs, or about 1.5% of the firmís total workforce, to India, China and other offfshore locations.

The IBM documents calculate that a Chinese programmer with three to five years on the job costs about $12.50 an hour "fully loaded" versus $56 an hour for a comparable US employee.

IBM's ruminations on the subject have predictably riled union officials, who claim that the company actually intends to pink-slip up to 30,000 domestic employees by the end of 2004. Other sources claim the company could send more than 200,000 jobs overseas by 2015.

Few are surprised that IBM is joining the outsourcing tidal wave. According to industry analysts, at least 40% of the Fortune 1,000 have begun outsourcing key business components "over there". Earlier this month, Accenture announced it would increase its Indian workforce by 200% to 10,000. As in the case of IBM, Accenture opted to move out its applications development, systems integration and business processing outsourcing (BPO) divisions.

Forrester Research (a company that faces its own pressure from offshore research groups) projects that nearly 1 million US IT jobs will leave the country over the next 15 years.


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