https://www.caixinglobal.com/2024-08-28/commentary-ibms-sudden-china-layoffs-tarnish-reputation-of-foreign-company-culture-102230810.html
5 replies (most recent on top)
The reputation of ‘Foreign Company Culture’ at IBM is now replaced by "Indian Company Culture" thanks to AK and his All Star India Squad.
What this means to IBMers everywhere :
- Indian style toilets in every IBM facility
- No toilet paper available for 1. above
That's IBM McKinsey globalization for everyone.
I suspect this decision was a long time coming. IBM and China have had a 30 year relationship that has weathered the political ups and downs over those 30 years. The four major tipping points most likely have been
- China’s inward focus on “buying Chinese products” which greatly disadvantages foreign suppliers
- India’s cost advantage, as Chinese labor has doubled vs Indias labor over the last 10 years.
- Chinas treatment of IP vs India’s. China has a state view of IP whereas India has an private (trademark) view of IP
- China’s declining IBM revenue profile (see number 1 above) vs India’s continued increasing revenue profile. In general, Companies invest where revenue is increasing. When revenue stalls, so does employment. When revenue declines so does employment.
Not only this but someone pointed out elsewhere in the comments ( @vhw) that it takes as many as 6 Indian Engineers to do the work of 4 in the US. Where is the efficiency in all this ? It's all about a corrupt Indian CEO running IBM and his bloated Indian bureaucracy who get the most holidays and turn out the least work output.
It's about making a profit for the IBM company at the end of the day, not sitting back in arrogance to bring your countrymen into the company and provide them with H1B visas to the US on some pretext or the other. If you have to push a lot of them out to streamline the business, then you need to do so. The needs of the business demand efficiency. The IBM CFO needs to be held accountable for failing to do the job he was put into place to do, as his focus is clearly elsewhere, not on generating results for shareholders.
The turning point came in 2018 with changing
China-U.S. relations, followed by IBM
accelerating its shift of R&D positions to India
under CEO Arvind Krishna since 2020. An
employee highlighted that the cost of one
Chinese employee could equal three to four
Indian employees, making the transition
economically motivated.
Salary of 1 Chinese IBMer = Salary of 3-4 Indian employees. This is all you need to know.
China is pushing foreign companies out. IBM is just one of many leaving.