Archive for October, 2010

IBM criticised heavily as US website attacks corporates that offshore j

October 12th, 2010

I read an article in the New York Times at the weekend. It was about a new website created to name and shame US corporate that have offshored work, amongst other things. The AFL-CIO which is a federation of unions has created a website which contains a job tracker.

You put in a post code and it tells you about the outsourcing of jobs at companies within a specified area. Here is the site.

The AFL-CIO has also done a major report about some of the damage being done by offshoring to US workers and economy. It criticises IBM in the report (see below).

Here is the “Sending Jobs Overseas: The Cost to America’s Economy and Working Families” report as it is titled if you want to read it.

I will go through the report and blog about it but just for a taste of its tone, here is the first paragraph:

“Outsourcing of jobs to foreign countries is one of the great hidden economic issues of recent years. It is big business, with multinational corporations actively shifting jobs out of the United States and around the globe in search of the cheapest possible labor. But, following popular outcry against the practice in 2004, corporations have done their best to hide the details even as they expand their offshoring activities. As a result, outsourcing has by and large fallen out of the headlines.”

This is what the report says about IBM:

“IBM: Outsourcing Out of Sight

IBM has been a global leader in technology for decades. More recently, it has become a leader in the twin practices of outsourcing jobs and of hiding that activity. In 2005, IBM and its wholly owned subsidiaries reported 329,000 employees worldwide. Almost 134,000 of those workers–more than 40 percent–were located in the United States. At the end of 2009, though IBM’s workforce had expanded to include almost 400,000 employees worldwide, only 105,000–just over a quarter of its entire workforce–were located in the United States. IBM is reported to now be the second largest employer in India, with 120,000 to 130,000 workers.

The movement of IBM jobs overseas is difficult to track due to the corporation’s focus on secrecy in this area. Though IBM’s domestic operations have shed a net total of nearly 30,000 employees since 2005, the company simply reports its nationwide total cuts, trimming smaller numbers from scattered sites to avoid triggering mass-layoff notification laws. The company no longer reports its employment numbers in geographical terms, making it difficult to discover where the company is hiring or where U.S. jobs go when taken offshore.

IBM workers whose jobs have stayed in the country have seen reduced benefits and lower pay–new facilities opening in the U.S. are paying up to $20,000 a year less than older centers paid. Meanwhile, CEO Sam Palmisano made over $21m in 2009 while cutting 10,000 U.S. jobs during the deepest recession since the Great Depression.”

I blogged earlier about the fact that IBM might cut its permanent staff numbers by three quarters and contract work out. I did a more in depth article about it here if you are interested.

They could do a UK equivalent of this website. But there might be a section about how US companies are replacing UK workers with offshore resources.


Saudi IT services market embraces outsourcing services, says IDC

October 12th, 2010

Outsourcing adoption has been on the increase in Saudi Arabia. According to a recent report by leading market research company IDC, the number of organizations that opt for third-party managed services grew from 6.5% in 2008 to 22.7% in 2009, when it constituted 18.4% of the total IT service market valued at $1.49bn.

As the Saudi economy is still in the infrastructure development stage, demand for project-based services like support and installation remain higher,” says Kavita Bhadauria, Research Manager, IT Services, IDC MEA.

“However, a healthy growth in outsourcing services signifies some level of maturation within the IT services sector. The majority of this growth can be seen in the uptake of discrete managed services rather than in traditional holistic IS outsourcing contracts.”

IDC expects the overall Saudi IT services market to grow at an annual average rate of 13.4% by 2014 but predicts that outsourcing will outpace the rest of the market at 15.9% year-on-year on average.

“A number of factors are contributing to the growth in the outsourcing market. Besides the natural maturation of the market, these include challenges in terms of skills availability and increasing pressure on companies to focus on core business.


Bernero renews outsourcing jab at Snyder

October 12th, 2010

Democratic candidate Virg Bernero launched a new outsourcing attack on Republican Rick Snyder on Sunday, accusing the Ann Arbor businessman of helping the Chinese compete against U.S. companies.
“What about the 630,000 Michiganders looking for work?” Bernero asked Snyder during his two-minute opening statement for the one-hour televised debate. “Mr. Snyder, how could you?
Snyder and his supporters decried the new attack as “blatant lies.”
At issue is Discera Inc., a California-based computer company Snyder co-founded in 2001 and of which he remains a director. Snyder’s Ann Arbor-based venture capital firm, Ardesta LLC, is a Discera investor.
Bernero cited a report in which a Discera official said the company “is helping Chinese businesses compete and win in the global marketplace.”
The attack continued a campaign theme in which Bernero has accused Snyder of shipping thousands of jobs overseas while he was a top official with the computer company Gateway.
Snyder has denied the allegations, insisting he grew Gateway by about 10,000 U.S. jobs when he was a top executive. Later outsourcing, which he opposed, occurred while he was a director but no longer involved in day-to-day management, Snyder says.
On the Discera issue, the Snyder campaign released a statement from Discera CEO Bruce Diamond that said the company recently opened a 300-square-foot sales and application office in Shenzhen, China.
“At no point, now or in the future, do I believe this eliminates any jobs here in the U.S., nor did we ‘ship’ any jobs out of the U.S. to open this office. In fact, it is the opposite; the increased sales will eventually create more (research and development) jobs here in the U.S.” A July 19 news release said the office is “the heart of the company’s permanent investment plan in China,” with “engineers, equipment, and researchers to support sophisticated chip and module integration, high definition and 3D video technology, and radio frequency and smart grid design.”


Companies shifting to IT outsourcing

October 12th, 2010

Companies are moving more of their IT spending to outsourcing, according to a new study, which may interest international contractors.

The study by Computer Economics revealed that spending on outsourcing increased from 3.8 per cent in 2008 to 6.1 per cent in 2009.

John Longwell, vice president of research for Computer Economics, a California-based IT research and advisory firm, said the recession is one of the key reasons why firms are increasingly opting to outsource their IT functions.

However, new developments are also impacting on firm’s decisions, he noted.

“Cloud computing is a development that will result in more money being spent with outside service providers, regardless of the macroeconomic climate.”

Called IT Outsourcing Statistics 2010/2011, the report also found that desktop support is the IT function with the greatest potential for reducing costs through outsourcing.

Last week, a report from REC Technology revealed that demand for people who work as an IT contractor is on the rise.


Outsourced Exercising

October 11th, 2010

Accenture acquires Ariba’s sourcing and BPO assets for $51 million

October 11th, 2010

Accenture acquires Ariba’s sourcing and BPO assets for $51 million

Under the terms of the agreement, upon the closing of the acquisition, Accenture will take ownership of these assets, which include Ariba’s category expertise, sourcing process expertise and strategic sourcing execution resources, strengthening Accenture’s position as a leading provider of sourcing and procurement consulting and outsourcing services.

Approximately 160 Ariba employees are expected to join Accenture upon the closing of the transaction. The acquisition, which is subject to customary closing conditions, is expected to close within Ariba’s quarter ended December. The purchase price is $51 million, $12 million of which is subject to escrow to be released based on the assignment and performance of certain assets.

“Ariba is a leader in spend management and this acquisition will extend and strengthen Accenture’s existing sourcing and procurement services by adding deeper category expertise, highly scalable global sourcing service delivery operations and proprietary sourcing databases, benchmarks and technologies,” said Mike Salvino, group chief executive, BPO, Accenture. “We continue to invest in our core BPO business by adding new capabilities that combine both our BPO and Management Consulting offerings to create value for the Ariba customer base and all of our clients.”

Ariba will retain its sourcing technology and the resources within its Global Services organization that are dedicated to software implementation and will continue to provide customers with services that enable them to maximize their use of Ariba’s solutions and the results that they deliver.

“In divesting our sourcing services and BPO assets and expanding our partner ecosystem to include world-class organizations like Accenture, Ariba can deliver on its strategy to provide companies with access to network-based solutions that allow them to more efficiently and effectively buy, sell and manage their cash,” said Kevin Costello, president, Ariba. “We remain committed to delivering innovative technologies – including sourcing applications – that enhance the entire commerce process.”


IBM rides market upswing to hit all-time high

October 11th, 2010

The stock rode a slight market upswing, climbing as high as $139.88 before slipping back to $139.73 in afternoon trading, up 86 cents for the day. The previous high was $139.19, reached during the dot-com boom on July 13, 1999.

The rise comes after IBM shares spent much of this year going sideways as concerns about European government debt and a sluggish economic recovery in the U.S. weighed on markets.

Broader factors aside, IBM’s rising share price reflects steadily climbing profits. Its second-quarter results marked the 30th straight period in which IBM has posted higher earnings per share than the year before.

The company’s corporate customers have been opening up their wallets a little wider this year to upgrade their technology, something many companies decided to put off during the recession to save cash.

And it has been able to entice still-reluctant customers with the promise of services and software designed to cut costs by automating or outsourcing complicated jobs.

IBM is also well-known for policies that are friendly to shareholders. It has established a regular habit of raising its dividend payout, which has tripled on a per-share basis since 2006. And it has committed more than $100 billion to buying back stock since 1995, a move that boosts the value of remaining shares.

IBM, which is based in Armonk, N.Y., is scheduled to report third-quarter earnings next Monday.


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