Thread regarding IBM layoffs

In 2015 when I was laid off I was talking to the India team lead for wintel He told me how much he made in a year Brought up currency calculator His annual salary was equivalent to 12,500 USD.

India has seen 7% to 16% inflation for many years and cost of living is quickly catching up to the west. For a comparison check prices on amazon.in. Many years of foreign investment are taking a toll and the govt. throws everything out of whack with massive subsidies to the poor and huge increases in public sector wages. All while wage growth is not happening in the west.

The big differential is tottering.

@2fzu all because our dear partners and sales people cannot sell clients on the value of local resources to support our products and services.

Then again, companies are so careless these days. They don’t give a hoot where their services come from and even if said services are terrible. It’s a race to the bottom.

In Services where I am, we can’t make enough profit margin off those offshore resources in order to sustain local resources. Accenture saw the volume-based model doesn’t work, so they divided their high cost consultants into a separate business unit with their own targets. The solution is simple to implement. Granted I believe any attempt to reshuffle the Services into local and India as separate groups will result in India winning and local folding, but in that case IBM’s profit margin will dive deep and so-called executives would need to be laid off in droves. So there would actually be incentive to bring in high-value work.

It really all depends on how soon IBM accountants see that they can’t keep up the shell game anymore and a real Hail Mary play is executed.

In 2015 when I was laid off I was talking to the India team lead for wintel He told me how much he made in a year Brought up currency calculator His annual salary was equivalent to 12,500 USD. With letting me go they were able to hire 7 of him and have a few thousand left over

Staffing at $5 per hour or less in India is cheaper. Billing client at $250 an hour is more profitable. Easy equation for the accounting bean counters.

Every reason given is correct to some degree. IBM first derives the expected profit and takes that. Pays the sales commissions (or just a portion if they can) and the leftover is what they budget for project expenses. That is goods and materials. Hardware on the cloud is essentially a fixed low margin cost these days. So that leaves human resources as the last bastion to be squeezed. If what is left doesn't cover the project then offshore is a good solution in this situation. Ignore the fact you painted yourself into a corner where offshore is a good solution. It is ultimately a shell game run by managers to hide and shift problems long enough to bolt to the getaway car after robbing the bank.

“When it’s doing so much of that through tax avoidance, it inevitably raises questions about how well the primary business is going.“

Couldn’t be a more accurate depiction of what’s going on at IBM now.

THe simple answer is that it is more tax efficient and is sometimes referred to as 'transfer pricing'. See this article from a few years agin.

https://qz.com/173735/ibm-saved-its-earnings-by-moving-almost-half-its-employees-to-the-netherlands/

Hi XGT. You answered the question yourself. Risk is not part of the evaluation equation. The bean counters lump all of the intangential parts of the equation into the “catch all” bucket. It all comes down to cost, and expected outcomes. IBM expects offshoring to be less costly, THUS it will be. Considering that most companies have already offshored most of their low hanging fruit, IBM is playing catch up. (IBM tends to be 2-3 years behind the first movers). As such when you play catch-up, you tend to ignore the facts, and manage to the expected outcomes. Wonder why facts don’t support reality??? It’s because expected outcomes are the result desired