IBM scaling down India business, MD Vanitha Narayanan to return to US

[Kaniska]

India cheap labor no more, VN and philipines are

I think this is a different way you are looking...I am working for a client engagement since last 1 year for a top 5 consulting firm in east coast...You will be surprised to know how the mindset of the client is different.

1- In the bidding process, if any one saying that they will do with cheaper cost, this is the first criteria of elimination of the vendor.
2- Quality of deliverable now takes the precendence rather than the cheap cost.Now the programs and engagement are of different model. It is like a product...Vendor are pain after program go live and one month of support. The cost matrix is designed based on how stable is the enviroment that has been delivered to the client....No concept of weekly billing or no non sense of resource utilization storois...Even client is not intrested to evaluate the candidate too...This is all the responsibility of Vendor...And the bill rate of this project 4 times more than our Indian compenies who operate in 2 digit bill rate mode...

3- Their clear preference, no offshore, they would like to see the people working in front of them ...

So outsourcing concept somehow has lost its sheen when it comes to any implementation assignment...There was a time when outsourcing was a taboo for each CEO's...But it no more the same case...Now the question is that how Indian IT sector will be impacted?

Here is my observation.

1- Indian IT has already evolved into mature stage...Clients now a days does not entirely depend on the Indian offshore for rate rather when they do not find qualified resources onsite and they feel that it is better to have a qualified offshore than average fake profile Onsite person.

2- More and More Indian IT companies are moving up in value chain of the IT inductry.They are more focused on management consulting, quality, Audit and cloud computing...It is not visible now, But i beleive, the impact of it will be visible after 2020.

3- Of late, most of the support work that was done by outsourcing firms, will be replaced with product company setting up of their own company in India itself rather than outsourcing it

4- Product companies are using Indian IT offices for R&D in a gretaer extent..

 

[jamahir]

1. why does the american computer company, ibm, need 100,000 employees... and that too in india, a place that has not given the world a single operating system or microprocessor...

2. "cloud computing" is just a passing fashion, hyped up by some mba types... future of storage is (a). citizen peer-to-peer for public data, (2). local storage for private data.

3. western outsourcing to indian info. tech. companies is more or less finished... no need to define reason.

4. another stupid term, "big data", is another passing fashion hyped by mba types.

5. another stupid term, "internet of things", is another passing fashion... yes, hyped by mba types who influence similarly stupid bunch of people... it managers ( cio ).

6. spacex does not have a "business model" for planet mars... that is the future... no "business models"... only what is common sense.

 

[Steakhouse]

Relocation of service sector from India to Philippines or Vietnam can easily be done, IT tech and call center can easily replace by Philippines english speaker, service sector don't need much capital to set up a center in other nation. Since Philippines much closer to US strategic interest in Asia and an ally, US company willfully relocate their office to Philippines.

 

[Steakhouse]

Philippines recently reopen USNaval base, US more incline to offshore more service jobs to Philippines. Just nature order of geopolitic play into conducting business in this world.

 

[Hulk]

My friend working in Adobe India and he also put status few days ago over his facebook that Adobe is also scale down their employees :S

Looks like you are watching how many jobs are getting laid off in India. Hope you realize that some companies lay-off but some other hire, which means eventually the job count is constant if not growing up. The IT services sector India is reaching the same stage like others where it is not going to be great growth anymore. There is nothing wrong with this, since you cannot have 40% growth every year. However, I heard that after few years the salary hike this time was decent.

Its not just about cheap labor as some people who have no insights call it. There are many factors here.
1) US does not have enough people to fill the jobs, even if money was not a factor. They just don't have the bodies, this is explained by the fact that many of us continue to travel us to fill jobs. (This included myself)
2) Yes, the cost is cheaper, but its not that anyone can do it. IT outsourcing needs experience and quality resources.

To explain the cheap cost thing little better, In the program that I manage for my client, we have client resources and resources from our company. The structure is that we are 60% and they are 40%. Out of the 40% client resources that are onshore 75% are Indians. When we will look at who is doing the heavy-lifting, like critical code/design etc 90% of that is done by Indians and only 10% or less by others. When we do release to production, I am doing one (Leading the team) this Friday, the team who is going to implement or solve any issue have all Indians, some locals are present but for escalations.

On the similar lines, the story is same everywhere, most of my friends are doing something similar. To cut it short, Indians are pretty much running every big websites. This includes major banks, healthcare companies etc.

So, I know some ignorant call this cheap labor but those people have no idea what they are talking here. What is even hilarious is that some people consider BPO as part of core IT which we do.

I know my subject as I manage delivery of critical system at my client for my company and I have experience on this subject for over 19 years. Take the cheap labor crap somewhere else.

 

[Hulk]

jobs going back to USA .. not vietnam or philippines.

Refer to post 20 for answer on cheap labor, the people who call this purely cheap labor do not know what they are talking about.

 

[shree835]

I am an IBM employee....Enjoyed reading this thread... I will say that, this is total crap news....Still Lot of hiring is on at Bangalore, Chennai, Hyd, Noida, Delhi and Pune IBM...

 

[siegecrossbow]

They recently sold their fab facility to Global Foundries, and they paid Global Foundries to take over their fabrication unit.

IBM Paying Globalfoundries $1.5 Billion to Take Unit in Retreat From Chips - Bloomberg

I was a part of the X86 servers department that got sold to Lenovo recently... IBM is abandoning ship when it comes to hardware, which is seen as unprofitable these days but actually helps prop up their software services. Got to blame the upper level management for the lack of vision.

 

[Hamartia Antidote]

I definitely think the trend is that outsourcing "to save money" has failed.
Companies are bringing their main development teams back on site so they can manage "developer churn" better and have people who actually know how their software works around to maintain it.

IBM is finding it hard to justify to their customers $450+/hr per body for an offshore team. Their customers simply aren't loose with their money anymore (after 2008) and are not satisfied with the bang for the buck they are getting.

 

[Rank]

My brother works in Adobe India and they have very small teams at Bangalore and gurgaon. Who is your friend at Adobe ? I know most of them.

Nitin Gupta

 

[Luca1]

Is it even worth to answer such comments?

The best Indian IT leave India for the west.

 

[Judge]

India cheap labor no more, VN and philipines are

Some of the lowest value addition jobs like voice and all are going to Philippines. It is infact Indian managers there who are running these centers in Philippines. Indian companies too have put up shop there. TCS has a large center there.

It is however inevitable that once the labour arbitrage goes and an ecosystem comes up, these kinds of jobs will shift.

 

[kṣamā]

@indianrabbit I can totally relate to you, but I must say you are wayyyy senior than me...Plus we too are rolling out our new extended suite this Friday. In short complete obliteration of Saturday and Sunday .

Well anyone from the industry can see what OP is saying. Not only IBM but many small and large companies are following the same trend... Efficiency. My client is one of the biggest IT Hardware Producer of commercial and military applications. Our present project used to be with a India IT giant for 6 yrs. We took over, a part of ,the project last year as our product did tasks worth of 35 odd developers from that firm. And that too with time advantage of more than 45%.

Initially the contract was signed for only about 20% of the work-share but now when our product has proved its mettle, our work share has been increased to more than 60%...and hence the roll out this Friday.

Almost same product is being used by other teams in our firm to automate other products of different clients. The age of Man-Monitoring-Machines are in its waning phase. Today we are like those parents who groom their children for few years and then see them go on to rule the world !!

 

[xyxmt]

Some of the lowest value addition jobs like voice and all are going to Philippines. It is infact Indian managers there who are running these centers in Philippines. Indian companies too have put up shop there. TCS has a large center there.

It is however inevitable that once the labour arbitrage goes and an ecosystem comes up, these kinds of jobs will shift.

Thats how it started in India initially it was US management then management slowly transferred to Indians, isnt it?
eventually the managements will transfer to Viets and Philipinos.

 

[Judge]

Thats how it started in India initially it was US management then management slowly transferred to Indians, isnt it?
eventually the managements will transfer to Viets and Philipinos.

Yes. That is how it works.
Oh and its not Vietnam for Call Centers, only Philippines.

We used the Voice offshoring and built on it. Now, Indian companies have moved from Voice to Data and now to Knowledge offshoring. Voice forms only 2% of Indian IT exports.

Though when this started, movement of call centers to Philippines, the Indian companies started evolving. Till now Call centers were located in Tier 1 cities...Now they are moving towards Tier 2 and even Tier 3 cities to save on wages and property costs.