IBM now has more workers in India than in America - reprise

The company that was once a symbol of American power has cut back its US-based workforce and now roughly a third of its employees are based in India. Does it matter?

IBM logo

IBM now employs 130,000 people in India - about a third of its total work force - and "well under 100,000 people at its American offices," according to the New York Times.

As recently as 2002, IBM only employed about 6,000 people in India, so it has been hiring roughly 8,000 a year. Also in 2002, IBM employed around 160,000 people in the USA. This had been reduced to 105,000 in 2009, when IBM stopped providing numbers. What it is today is anyone's guess. While there have been various lay-offs, IBM has also added staff by buying more than 150 companies.

Vanitha Narayanan

Vanitha Narayanan

Image: IBM

The change to "Indian Business Machines" has hit the news because Times tech reporter Vindu Goel got an interview with Vanitha Narayanan, chairman of the IBM's Indian operations, in Bangalore. However, the transition may have happened five years ago. In 2012, for example, Computerworld suggested that "In a symbolic shift, IBM's India workforce likely exceeds U.S." This story was based on an internal document that IBM refused to confirm.

Either way, the shift is not surprising, for three reasons. First, India produces a lot of English-speaking computer science graduates willing to work for much lower wages than American programmers. Second, the USA has been restricting immigration from India and other countries, so many have been working under temporary H-1B visas. Third, India is trying to build its own technology industry, under prime minister Narendra Modi's flagship Digital India project. This should encourage more of the country's best technologists to work in or return to India.

India's technology industry boomed on outsourcing through companies such as Tata Consultancy Services, Infosys and Wipro. More recently, it moved into web and then smartphone app development, which is one of the things it does for IBM.

As Goel reports: "IBM even has a Bangalore 'garage' full of app designers who build corporate iPhone and iPad apps to simplify tasks like helping airline agents rebook passengers, bankers make loans and doctors update patient files."

The real question is whether it has done IBM any good.

IBM has now suffered 21 quarters in a row of declining revenues, and its 2016 turnover of $79.92 billion is less than it was in 1998 ($81.67bn). This is a wretched performance in a market where companies like Apple, Google and Facebook have come from almost, or literally, nothing.

If you believe the message boards where former and some current IBM employees hang out, this is partly the result of replacing highly-skilled but highly-paid, experienced and productive senior employees with low-skilled, lower-paid and less productive junior employees, whether based in India or not.

That may well be true, but it's only one of many factors in IBM's long-term decline....

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