IBM Now Has More Employees in India Than in the U.S.
IBM Now Has More Employees in India Than in the U.S.
IBM has shifted its center of gravity halfway around the
world to India, making it a high-tech example of the globalization trends that
the Trump administration has railed against.
By VINDU GOEL SEPT. 28, 2017
BANGALORE, India — IBM dominated the early decades of
computing with inventions like the mainframe and the floppy disk. Its offices
and factories, stretching from upstate New York to Silicon Valley, were hubs of
American innovation long before Microsoft or Google came along.
But over the last decade, IBM has shifted its center of
gravity halfway around the world to India, making it a high-tech example of the
globalization trends that the Trump administration has railed against.
Today, the company employs 130,000 people in India —
about one-third of its total work force, and more than in any other country.
Their work spans the entire gamut of IBM’s businesses, from managing the
computing needs of global giants like AT&T and Shell to performing
cutting-edge research in fields like visual search, artificial intelligence and
computer vision for self-driving cars. One team is even working with the
producers of Sesame Street to teach vocabulary to kindergartners in Atlanta.
“IBM India, in the truest sense, is a microcosm of the
IBM company,” Vanitha Narayanan, chairman of the company’s Indian operations,
said in an interview at IBM’s main campus in Bangalore, where the office towers
are named after American golf courses like Peachtree and Pebble Beach.
The work in India has been vital to keeping down costs at
IBM, which has posted 21 consecutive quarters of revenue declines as it has
struggled to refashion its main business of supplying tech services to
corporations and governments.
The tech industry has been shifting jobs overseas for
decades, and other big American companies like Oracle and Dell also employ a
majority of their workers outside the United States.
But IBM is unusual because it employs more people in a
single foreign country than it does at home. The company’s employment in India
has nearly doubled since 2007, even as its work force in the United States has
shrunk through waves of layoffs and buyouts. Although IBM refuses to disclose
exact numbers, outsiders estimate that it employs well under 100,000 people at
its American offices now, down from 130,000 in 2007. Depending on the job, the
salaries paid to Indian workers are one-half to one-fifth those paid to
Americans, according to data posted by the research firm Glassdoor.
Big in India
American technology companies have been expanding in
India for years, drawn by the availability of low-cost, technically trained
English-speaking talent. Indian government agencies and corporations have also
become major buyers of hardware, software and services, spending about $38
billion last year.
What They Do in India
IBM
Things as diverse as cutting-edge research and managing
computer networks for many of the world’s biggest corporations.
Oracle
Much of its software development. It has more employees
in India than in any other country except the United States.
Dell
Research and development, consulting and management of
computing systems. After acquiring the storage company EMC, Dell became a major
force in India.
Cisco
Everything. The network equipment maker consciously set
up its Bangalore campus 10 years ago as a “second world headquarters.”
Microsoft
Software development, cloud and cybersecurity services,
as well as customer support and testing on how to bring the internet to rural
areas.
Alphabet (Google)
Software development for services like Gmail, maps and
YouTube, as well as ones aimed at the Indian market, such as voice dictation
and mobile payments.
Source: Company filings, news reports, public statements
by executives and interviews. By Vindu Goel. Ayesha Venkataraman contributed
research from Mumbai.
Ronil Hira, an associate professor of public policy at
Howard University who studies globalization and immigration, said the range of
work done by IBM in India shows that offshoring threatens even the best-paying
American tech jobs.
“The elites in both parties have had this Apple iPhone
narrative, which is, look, it’s O.K. if we offshore the lower-level stuff
because we’re just going to move up,” he said. “This is a wake-up call. It’s
not just low-level jobs but high-level jobs that are leaving.”
While other technology titans have also established huge
satellite campuses in India, IBM caught the attention of President Trump. At a
campaign rally in Minneapolis just before the November election, he accused the
company of laying off 500 Minnesotans and moving their jobs to India and other
countries, a claim that IBM denied.
Although he has not singled out the company for criticism
since, Mr. Trump has tried to curb what he viewed as too many foreigners taking
tech jobs from Americans. In April, he signed an executive order discouraging
the granting of H-1B temporary work visas for lower-paid tech workers, most of
whom come from India. IBM was the sixth-largest recipient of such visas in
2016, according to federal data.
IBM, which is based in Armonk, N.Y., is sensitive to the
perception that Americans are losing jobs to Indians. After Mr. Trump won the
election, IBM’s chief executive, Ginni Rometty, pledged to create 25,000 new
American jobs. Ms. Rometty, who helped carry out the India expansion strategy
when she was head of IBM’s global services division, has also discussed with
the new administration plans to modernize government technology and expand tech
training for people without four-year college degrees. She also joined one of
Mr. Trump’s now-defunct business advisory councils.
IBM declined to make Ms. Rometty or another top executive
available for an interview. But the company noted that it is investing in the
United States, including committing $1 billion to training programs and opening
new offices.
Ms. Narayanan, who spent 12 years working at IBM in the
United States and China before moving to India in 2009, said the company
decided where to put jobs based on where it could find enough qualified workers
and the customer’s budget. “It’s not as if someone says, ‘Oh, jeez, let me just
take these jobs from here and put them there,’” she said.
William Lazonick, a professor of economics at the
University of Massachusetts, Lowell, who has studied the globalization of
business, said IBM and other tech companies had benefited greatly from the
emergence of a low-cost, technically skilled English-speaking work force in
India.
“IBM didn’t create this,” he said. “But IBM would be a
totally different company if it wasn’t for India.”
IBM, which opened its first Indian offices in Mumbai and
Delhi in 1951, is now spread across the country, including Bangalore, Pune, Kolkata,
Hyderabad, and Chennai.
Most of the Indian employees work in IBM’s core business:
helping companies like AT&T and Airbus manage the technical sides of their
operations. Indians perform consulting services, write software and monitor
cloud-based computer systems for many of the world’s banks, phone companies and
governments.
But researchers here also try out new ideas. Looking to
build a new system for searching with images instead of words, a team in
Bangalore turned to Watson to index 600,000 photos from the world’s top fashion
shows and Bollywood movies. Last spring, a major Indian fashion house, Falguni
Shane Peacock, tried the tool, which helps designers avoid direct copies or
even do a riff on an old look, and generated new patterns for three dresses.
“It has the capability of doing research in a couple of
seconds that would take a long time,” Shane Peacock, who runs the Mumbai firm
with his wife, said in an interview.
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.
During a recent visit, Ramya Karyampudi, a user
experience designer, was at the whiteboard sketching out an app for a smart
refrigerator that would solve the universal problem of what to make for dinner.
Starting with a drawing of a husband trying to plan a
surprise meal for his wife, Ms. Karyampudi depicted the internet-connected
refrigerator looking at what food was inside, sending over relevant recipes,
telling him what extra ingredients he needed to pick up, and playing a video
showing him how to cook it all.
IBM’s outsize presence in India today is all the more
striking given that it left the country entirely in 1978 after a dispute with
the government about foreign ownership rules.
IBM re-entered the country through a joint venture with
Tata in 1993, initially intending to assemble and sell personal computers.
IBM’s leaders soon decided that India’s potential was far bigger — both as a
market and as a base from which to serve customers around the world. The
company took full control of the venture, established an Indian branch of its
famed research labs, and in 2004, landed a landmark 10-year, $750 million
contract from Bharti Airtel, one of India’s biggest phone companies, which
remains a major customer.
IBM’s chief executive at the time, Samuel J. Palmisano,
was so proud of his India initiative that he rented out the grounds of the
Bangalore Palace in June 2006, flew out the board, and told a crowd of 10,000
that IBM would invest $6 billion in India over the next three years.
Today, India does not just deliver services to IBM’s
global clients. It is also a crucial market and the center of IBM’s efforts to
help businesses serve the next big slice of customers: the billions of poorer
people who have been largely ignored by the tech revolution.
For example, teams here have been applying IBM technology
to process very small loans so that banks can make a profit on them.
IBM has also been working with Manipal Hospitals, a chain
based in Bangalore, to adapt Watson to help doctors treat certain cancers.
Presented with a patient’s medical history, the system taps into a database
that includes advice from doctors at Memorial Sloan Kettering Cancer Center in
New York to recommend the best treatments — including the price, a big
consideration since most Indians lack health insurance.
Dr. Ajay Bakshi, Manipal’s chief executive, said the
biggest potential for the technology was in rural hospitals with few doctors.
Manipal has just begun offering online “second opinions” from Watson for 2000
rupees, or about $31. “It never sleeps. It never forgets. It doesn’t get
biased,” he said.
IBM executives say projects like these represent the
company’s future. “I am looking for India to be my hub for affordable
innovation,” Ms. Narayanan said.
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