Outsourcing grows, but so does rightsourcing.
By Deepak Chitnis
WASHINGTON, DC: A leaked internal document from IBM indicates that the software giant currently employs more workers in India than it does in the US.
The leaked information comes at a time when IBM (International Business Machine, Inc.) has been laying off 3,300 workers in North America, with 747 of those layoffs occurring in New York, as it looks to increase its profit margin by outsourcing its work to non-US employees in India, Mexico, China, and the Philippines.
How much are they saving? A senior IT analyst in the US would cost IBM about $100,000 annually, but the average salary an employee in India makes is only around $17,000.
It’s no secret that IBM has been near (or even at) the forefront of outsourcing for years now. Its employment numbers in India increased dramatically over the last decade; although generally secretive of its employment numbers, estimates from 2012 had already pegged the company as having more employees in India –roughly 430,000 — than the US.
Quite an increase, given that IBM’s self-reported number of India-based employees in 2002 is just 4,900.
But although India remains the #1 country of choice for US countries looking to outsource their work-forces, a combination of factors — the Obama administration trying (at least in theory) to limit outsourcing to bolster the domestic economy, incentives created by local and state governments to keep jobs within the US — has made a number of second-tier cities into viable destinations for companies looking for relatively inexpensive but US-based workers.
The initiative is being labeled “rightsourcing” by its proponents, and it’s starting to pick up some traction. Several IT companies such as AT&T, PayPal, Garmin, and Dell, have set up offices in cities like Plano TX, Indianapolis, and Salt Lake City, which are a far cry from the usual hot spots like New York City, Chicago, and San Francisco. An ad (above) by Zinnov, an advocacy group for corporate and organizational globalization, lists all the best cities and several reasons for moving to them.
It remains to be seen, however, what kind of an impact rightsourcing can have on actual outsourcing. The money saved by going abroad — not just for IBM, but also Infosys and Cognizant, Accenture, among others — is still more than if these companies stay in the US. But it’s almost certain to make a dent, and with US-India relations having been strained in recent months because of business and trade-related issues, rightsourcing could have a very big impact on international relations, too.
To contact the author, email to dileepthekkethil@americanbazaaronline.com