Indian IT Outsourcing and Consulting

Is IBM Actually Based on Diversity or Indian Labor?

Executive Summary

  • IBM has a multidecade strategy of increasing profit margins on workers by replacing domestic with Indian workers.
  • They call this strategy a “commitment to diversity.”

Introduction

Diversity is a term that sounds like it means one thing, but it used as a cover for something entirely different. The usage of the term by IBM is a perfect example of how the term is used to pretend it is describing something that it is not.

Ginni Rometty’s on IBM’s Commitment to Diversity

For example, when IBM CEO Ginni Rometty of IBM makes the following statement.

IBM thinks about diversity the way we think about innovation — both are essential to the success of our business. When we innovate, technology becomes smarter for clients and creates new opportunities for growth.

When we incorporate diversity into our business, we create better innovations and outcomes. IBM has embraced diversity, and it gives opportunities for IBMers and our clients to achieve their full potential.

IBM and Ginni can be sure that this statement goes virtually without any investigation or commentary in any IT media outlet.

This is the standard marketing presentation by IBM. However, employees at IBM tell a very different story. 

This quote is from the article. My father was IBM’s first black software engineer. The racism he fought persists in the high-tech world today.

IBM publicly represents itself as a company with deep roots in diversity and inclusion, but history tells a different story. The roots of racism in high tech coincide with the advent of the digital age, when in the late 1920s a fledgling company run by a cutthroat but savvy businessman named Thomas J. Watson saw an opportunity in eugenics.

Eugenics is a pseudoscience that seeks to create a “racially pure” master human race by eliminating those deemed inferior. In 1928, the Eugenics Records Office in Cold Spring Harbor, N.Y., had undertaken a project to identify mixed-race individuals on the island of Jamaica for forced sterilization and other means of population control. Realizing the massive amount of data to be collected and compiled, Watson stepped in with IBM to provide the punched-card technology crucial for the Jamaica project’s success. – Los Angles Times

IBM – A Commitment to Firing Domestic Workers from their Jobs and Replacing Them With Indians

IBM has followed a multidecade policy of removing domestic workers from their jobs and replacing them with lower-cost Indian resources, both in-home IT market countries and in India. This has partially covered up the fact that IBM is a company in steep decline. This, profit maximization, is why IBM embraces “diversity” which IBM seems to define as hiring mostly Indians from one region of India. That is to IBM Diversity = Indians and does not = domestic employees.

There is no lie that proponents of Indian labor won’t tell to maintain these profits. Unless something is done, every issue discussed in this article and the articles above, we predict will get worse.

The Easy Way

IBM has found a more natural way to make money rather than innovating or bringing out exciting products. It has decided to mainly be a system implementing company, making money from the high US IT rates, and the much lower rates it pays consultants. Secondly, it brings a continuous stream of new IT consultants over from India such that several of the projects I have worked on with IBM have been 90% Indian. The few non-Indian consultants being one or two consultants, and then the team manager who is always American born. Sufficed to say, IBM could never make this same margin on US-born consultants, and so the IT practice at IBM is in the process of becoming 90% Indian. This is combined with increasing amounts of outsourcing of work to India. Wary of caution, IBM had decided to no more extended report their employment numbers on a per-country basis. This means that while IBM will continue to pull large sums of money from US companies, it will no longer provide a significant share of its earnings in US employment.

To say that IBM is becoming increasingly global is either sugar-coating or misunderstanding of what is happening. IBM is in the process of becoming an Indian company, much like Infosys, only performing arbitrage between Indian labor and US and European consulting rates. The company will then provide very little US employment but still bill at the same level as before. This will lead to higher payouts for the management of IBM, and eventually, the income inequality within IBM will come to approximate that of India itself. This is the bold new future direction for IBM, an outsourced firm where the work is done by people that can be very easily controlled and paid quite a bit less than IBM’s previous workforce. The morale within IBM is horrendous currently, and the easy money of labor arbitrage is like heroin to IBM.

Conclusion

IBM is committed to enormous profit margins, and this means firing domestic workers and hiring Indian workers both in India and in domestic home IT markets. IBM hides its employment in different countries to prevent anyone from seeing this. IBM likes to sugar coat this strategy by calling it a commitment to diversity.

IBM’s model is a problem because it does not delivery very much value to clients. Firstly, their advice is very generic and similar to Deloitte or Accenture designed to extend the stay of their consultants on projects. The robotic and undifferentiated nature of large company consulting characteristics is described in this article. Secondly, it undermines US employment and passes any cost saving from a lower-cost labor force to the partners and executives at IBM while the client pays the same price they paid previously.

References

https://www.latimes.com/opinion/story/2019-09-20/ibm-nazi-germany-tech-racism-father