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Everyone seems to be making the assumption that all the work IBM India does is outsourced from US. IBM India is the biggest domestic IT player in India with cli

Everyone seems to be making the assumption that all the work IBM India does is outsourced from US. IBM India is the biggest domestic IT player in India with clients like Airtel, Indian Railways, HDFC etc.; IBM India also services clients from other countries in the world (which wouldn't have happened otherwise because its too expensive in the US). And, IBM India, has a few research labs setup that do independent research. Considering this, how is the number of employees in India and US even a relevant question. Isn't it similar to say why is there more manufacturing workforce in China when compared to US for company X? We know why, it costs less for the company and the client, and taking advantage of it opened up new markets/demand.

davesque 9y ago
The reason people are comparing US and Indian employees is because the doubling of IBM's India workforce since 2007 seems to be, in many ways, a result of labor arbitrage, as the linked article is arguing. You can slice things any way you want, but the fact is that this is a problem for the average American worker. In other words, it's something that readers of the NYT would care about.
- samstave 9y ago
  I am beginning to think that out-sourcing ones-self is a better and better idea...
  - saimiam 9y ago
    Meaning?
    - majewsky 9y ago
      Moving to a poorer country on reduced pay that still outperforms that of locals in the same job, maybe?
    - mikestew 9y ago
      Collect a U. S. salary while shipping the actual work to a less expensive worker elsewhere. Just like companies do, only on an individual basis. I believe it has actually been done (then the person got caught and fired, IIRC).
      - alxmdev 9y ago
        It's been done alright! > "As it turns out, Bob had simply outsourced his own job to a Chinese consulting firm. Bob spent less than one-fifth of his six-figure salary for a Chinese firm to do his job for him." https://www.theguardian.com/world/2013/jan/16/software-developer-outsources-own-job https://www.theguardian.com/world/2013/jan/16/software-devel...
        hardlianotion 9y ago
        I remember that. The only bit I have no sympathy with was that he chose to send his whole day quietly browsing the web.
  - pm90 9y ago
    I've heard a lot of my foreign born collegues do that. After they've reached a certain seniority, they decide to go back to their country of birth while keeping similar compensation, essentially making them very rich in their home country. I've only seen this work for Indian and Chinese born nationals though, where the home country has good relations with the US (as opposed to, say Iraninans, who don't have the option of going back).
- samfisher83 9y ago
  Even the arbitrage is going to start failing. The housing is insanely expensive in India especially relative to the salaries. At some point most of the people who can leave will leave, because its hard to live there with the salaries they are are getting. You can make more in other countries and the housing difference would not even be that much different.
  - jgalt212 9y ago
    > its hard to live there with the salaries they are are getting hmm, sounds just like SF or NYC.
    - screye 9y ago
      I'd say worse. IBM employees in India get paid around 500,000 rupees in India. A non-cramped 2 bedroom apartment in a decent area in the big cities (Mumbai, Bangalore, Delhi ) will set you back 10,000,000 rupees easily. That is 20 times their salary. I'd say that's a higher multiplier per unit salary, than for the US. Also note that living just outside the city (as people in the US do) isn't always an option, unless you are up for a 2+2 hour commute daily.
      - hkmurakami 9y ago
        Anecdata is a ~10x multiplier in SV for the kind of housing you describe.
      - nikanj 9y ago
        The numbers look similar in Vancouver and Toronto. It seems to be an emergent trend in the global housing markets.
        wbl 9y ago
        Except Tokyo, Vienna, Montreal, Germany. Almost like we could apply their policies in SV.
- snambi 9y ago
  Americans are not aware of cost of living in places like Bangalore. The India real estate is expensive for the folks living in Silicon Valley. It is cheaper to buy real estate in USA compared to India.
  - seanmcdirmid 9y ago
    The same is true in china, but that has more to do with real estate bubbles than fundamentals. Rents are still very cheap. Is the same true in Indian cities?
    - gourabmi 9y ago
      The real estate pockets in industrial hubs like Bangalore, Mumbai is expensive. Tier 2 cities are cheaper.
      - seanmcdirmid 9y ago
        How do sale prices correlate to rents?
        geodel 9y ago
        Yearly rents are about ~2% of the price of property, In US it is about ~7%. So yes rents are cheaper in India because that's what market can afford.
        taurussai 9y ago
        In Bangalore, sale price/monthly rent ratio in an ok neighborhood would be around 200. In a pretty good neighborhood this go up to to 300-400. Mumbai is more expensive than this. Nobody buys property in India and makes a killing off the rents -- its mainly the price appreciation (inflation is around 6-7%).
        gozur88 9y ago
        That's the classic real estate bubble.
- nopin 9y ago
  Do you know that Indian GDP has grown significantly from 2007? Could it be that the market in Asia has grown and hence IBM wants a larger presense in India. And that since the labor is relatively cheaper they can afford more people over there than in USA? Why do you think that by staying in US IBM could have competed with other companies in India fighting for the Indian/Asian market?
samstave 9y ago
I think its more just an awareness issue of one of the largest, oldest, deepest tech companies in the world, a US based company, has now shifted its employee foot-print out of the US... and yes, it is based on economics for the company, as you say. So I think the real takeaway here is that IBM is no longer a US based company, per se - but now is just a global tech company. And you might even say they are the first of the giants to just be simply a "lobal tech company" -- while many a startup are already "global" or virtual as it were -- its just an interesting shift in the timeline of IBM as a company.... and thus relevant and of note when looking at the company IBM itself.
blizkreeg 9y ago
You're getting a little defensive here. IBM was one of the crown jewels of American industry. It was an iconic company in its time. The fact that it now employs more people in India than the US is something to ponder. It isn't so much about the merits of outsourcing. Everything can be done cheaper by getting it done in another part of the world. Should it be? Sometimes the answer is yes, at other times, not. Imagine for a second that 50 years from today (when say India is in a place where the US is today), many Indian jobs are outsourced to another country. Same thing.
- 794CD01 9y ago
  That was merely an accident of history. The I in IBM doesn't stand for American.
  - adventured 9y ago
    It wasn't merely an accident. The US had a superior context which enabled something like IBM to exist and thrive. Name another country circa 1911 that could have produced IBM and enabled it to acquire such vast global scale at its peak. There are only a handful of nations that can even be considered as possible. IBM came out of the US for the exact same reason Fairchild, Intel, Cisco, Silicon Graphics, Motorola, Texas Instruments, HP, Sun, Xerox, AMD, Apple, Qualcomm, etc. all did.
    - BeetleB 9y ago
      >IBM came out of the US for the exact same reason Fairchild, Intel, Cisco, Silicon Graphics, Motorola, Texas Instruments, HP, Sun, Xerox, AMD, Apple, Qualcomm, etc. all did. By that reasoning, IBM is outsourcing from the US for exactly the same reason virtually all the other companies you listed are. Sure, something about the US helped them to exist and thrive. And something about the US is helping them to outsource. The argument cuts both ways.
      - adventured 9y ago
        > By that reasoning, IBM is outsourcing from the US for exactly the same reason virtually all the other companies you listed are. Of course. Most of the outsourcing has been about labor costs. The US has among the highest labor costs on the the planet, the nations (Vietnam, China, India, Mexico, etc) that the US has heavily outsourced to - whether manufacturing or IT - are or were far lower net cost nations to do those outsourced things in. What's cutting against the US is mostly obvious: incomes are very high, infrastructure costs are far too high (impacts almost everything in the cost structure in the US, from transportation to manufacturing), the effective corporate income tax rate in the US is among the highest (while many developed nations are aggressively lowering their rates), vast & rapid growth in economic regulations over the last 30-40 years, large expansion of general burden on business formation over that time (taxes, regulation, red tape, abusive zoning laws, etc.; leading to far lower dynamism in the US economy, weak productivity growth, perpetually falling new business formation, etc).

davesque 9y ago

The reason people are comparing US and Indian employees is because the doubling of IBM's India workforce since 2007 seems to be, in many ways, a result of labor arbitrage, as the linked article is arguing. You can slice things any way you want, but the fact is that this is a problem for the average American worker. In other words, it's something that readers of the NYT would care about.

samstave 9y ago
I am beginning to think that out-sourcing ones-self is a better and better idea...
- saimiam 9y ago
  Meaning?
  - majewsky 9y ago
    Moving to a poorer country on reduced pay that still outperforms that of locals in the same job, maybe?
  - mikestew 9y ago
    Collect a U. S. salary while shipping the actual work to a less expensive worker elsewhere. Just like companies do, only on an individual basis. I believe it has actually been done (then the person got caught and fired, IIRC).
    - alxmdev 9y ago
      It's been done alright! > "As it turns out, Bob had simply outsourced his own job to a Chinese consulting firm. Bob spent less than one-fifth of his six-figure salary for a Chinese firm to do his job for him." https://www.theguardian.com/world/2013/jan/16/software-developer-outsources-own-job https://www.theguardian.com/world/2013/jan/16/software-devel...
      - hardlianotion 9y ago
        I remember that. The only bit I have no sympathy with was that he chose to send his whole day quietly browsing the web.
- pm90 9y ago
  I've heard a lot of my foreign born collegues do that. After they've reached a certain seniority, they decide to go back to their country of birth while keeping similar compensation, essentially making them very rich in their home country. I've only seen this work for Indian and Chinese born nationals though, where the home country has good relations with the US (as opposed to, say Iraninans, who don't have the option of going back).
samfisher83 9y ago
Even the arbitrage is going to start failing. The housing is insanely expensive in India especially relative to the salaries. At some point most of the people who can leave will leave, because its hard to live there with the salaries they are are getting. You can make more in other countries and the housing difference would not even be that much different.
- jgalt212 9y ago
  > its hard to live there with the salaries they are are getting hmm, sounds just like SF or NYC.
  - screye 9y ago
    I'd say worse. IBM employees in India get paid around 500,000 rupees in India. A non-cramped 2 bedroom apartment in a decent area in the big cities (Mumbai, Bangalore, Delhi ) will set you back 10,000,000 rupees easily. That is 20 times their salary. I'd say that's a higher multiplier per unit salary, than for the US. Also note that living just outside the city (as people in the US do) isn't always an option, unless you are up for a 2+2 hour commute daily.
    - hkmurakami 9y ago
      Anecdata is a ~10x multiplier in SV for the kind of housing you describe.
    - nikanj 9y ago
      The numbers look similar in Vancouver and Toronto. It seems to be an emergent trend in the global housing markets.
      - wbl 9y ago
        Except Tokyo, Vienna, Montreal, Germany. Almost like we could apply their policies in SV.
snambi 9y ago
Americans are not aware of cost of living in places like Bangalore. The India real estate is expensive for the folks living in Silicon Valley. It is cheaper to buy real estate in USA compared to India.
- seanmcdirmid 9y ago
  The same is true in china, but that has more to do with real estate bubbles than fundamentals. Rents are still very cheap. Is the same true in Indian cities?
  - gourabmi 9y ago
    The real estate pockets in industrial hubs like Bangalore, Mumbai is expensive. Tier 2 cities are cheaper.
    - seanmcdirmid 9y ago
      How do sale prices correlate to rents?
      - geodel 9y ago
        Yearly rents are about ~2% of the price of property, In US it is about ~7%. So yes rents are cheaper in India because that's what market can afford.
      - taurussai 9y ago
        In Bangalore, sale price/monthly rent ratio in an ok neighborhood would be around 200. In a pretty good neighborhood this go up to to 300-400. Mumbai is more expensive than this. Nobody buys property in India and makes a killing off the rents -- its mainly the price appreciation (inflation is around 6-7%).
        gozur88 9y ago
        That's the classic real estate bubble.
nopin 9y ago
Do you know that Indian GDP has grown significantly from 2007? Could it be that the market in Asia has grown and hence IBM wants a larger presense in India. And that since the labor is relatively cheaper they can afford more people over there than in USA? Why do you think that by staying in US IBM could have competed with other companies in India fighting for the Indian/Asian market?

samstave 9y ago

I think its more just an awareness issue of one of the largest, oldest, deepest tech companies in the world, a US based company, has now shifted its employee foot-print out of the US... and yes, it is based on economics for the company, as you say. So I think the real takeaway here is that IBM is no longer a US based company, per se - but now is just a global tech company. And you might even say they are the first of the giants to just be simply a "lobal tech company" -- while many a startup are already "global" or virtual as it were -- its just an interesting shift in the timeline of IBM as a company.... and thus relevant and of note when looking at the company IBM itself.

blizkreeg 9y ago

You're getting a little defensive here. IBM was one of the crown jewels of American industry. It was an iconic company in its time. The fact that it now employs more people in India than the US is something to ponder. It isn't so much about the merits of outsourcing. Everything can be done cheaper by getting it done in another part of the world. Should it be? Sometimes the answer is yes, at other times, not. Imagine for a second that 50 years from today (when say India is in a place where the US is today), many Indian jobs are outsourced to another country. Same thing.

794CD01 9y ago
That was merely an accident of history. The I in IBM doesn't stand for American.
- adventured 9y ago
  It wasn't merely an accident. The US had a superior context which enabled something like IBM to exist and thrive. Name another country circa 1911 that could have produced IBM and enabled it to acquire such vast global scale at its peak. There are only a handful of nations that can even be considered as possible. IBM came out of the US for the exact same reason Fairchild, Intel, Cisco, Silicon Graphics, Motorola, Texas Instruments, HP, Sun, Xerox, AMD, Apple, Qualcomm, etc. all did.
  - BeetleB 9y ago
    >IBM came out of the US for the exact same reason Fairchild, Intel, Cisco, Silicon Graphics, Motorola, Texas Instruments, HP, Sun, Xerox, AMD, Apple, Qualcomm, etc. all did. By that reasoning, IBM is outsourcing from the US for exactly the same reason virtually all the other companies you listed are. Sure, something about the US helped them to exist and thrive. And something about the US is helping them to outsource. The argument cuts both ways.
    - adventured 9y ago
      > By that reasoning, IBM is outsourcing from the US for exactly the same reason virtually all the other companies you listed are. Of course. Most of the outsourcing has been about labor costs. The US has among the highest labor costs on the the planet, the nations (Vietnam, China, India, Mexico, etc) that the US has heavily outsourced to - whether manufacturing or IT - are or were far lower net cost nations to do those outsourced things in. What's cutting against the US is mostly obvious: incomes are very high, infrastructure costs are far too high (impacts almost everything in the cost structure in the US, from transportation to manufacturing), the effective corporate income tax rate in the US is among the highest (while many developed nations are aggressively lowering their rates), vast & rapid growth in economic regulations over the last 30-40 years, large expansion of general burden on business formation over that time (taxes, regulation, red tape, abusive zoning laws, etc.; leading to far lower dynamism in the US economy, weak productivity growth, perpetually falling new business formation, etc).