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IBM Slovakia – Offshoring

IBM just keeps hiring and hiring in Slovakia. I’ve ended up in bidding wars with them and the other big multinationals for a couple of people.

Due to inexperience, I’ve lost those bidding wars to date but will win the next rounds.

I keep wondering where on earth are all these jobs coming from?

The normally annoying Robert Cringely has the answer.

LEAN is about offshoring and outsourcing at a rate never seen before at IBM. For two years Big Blue has been ramping up its operations in India and China with what I have been told is the ultimate goal of laying off at least one American worker for every overseas hire. The BIG PLAN is to continue until at least half of Global Services, or about 150,000 workers, have been cut from the U.S. division. Last week’s LEAN meetings were quite specifically to find and identify common and repetitive work now being done that could be automated or moved offshore, and to find work Global Services is doing that it should not be doing at all. This latter part is with the idea that once extraneous work is eliminated, it will be easier to move the rest offshore.

All this is supposed to happen by the end of 2007, by the way, at which point IBM will also freeze its U.S. pension plan.

The point of this has nothing to do with the work itself and everything to do with the price of IBM shares. Remove at least 100,000 heads, eliminate the long-term drag of a defined-benefit pension plan, and the price of IBM shares will soar. This is exactly the kind of story Wall Street loves to hear. Palmisano and his lieutenants will retire rich. And not long after that IBM’s business will crash for reasons I explain below.

Last time I posted about IBM pensions a current employee stepped in with some interesting commentary in defense of IBM. I hope KC stops by again to give us his input on the current offshoring project.

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