IBM’s Indian Global Delivery Centers are anti-education?

By Robert X. Cringely
Published 12 years ago

The theory of outsourcing and offshoring IT as it is practiced in the second decade of the 21st century comes down to combining two fundamental ideas: 1) that specialist firms, whether here or overseas, can provide quality IT services at lower cost by leveraging economies of scale, and; 2) that offshore labor markets can multiply that price advantage through labor arbitrage using cheaper yet just as talented foreign labor to supplant more expensive domestic workers who are in extremely short supply. While this may be true in the odd case, for the most part I believe it is a lie.

This lie is hurting both American workers and the ability of American enterprise to compete in global markets.

My poster child for bad corporate behavior in this sector is again IBM, which is pushing more and more of its services work offshore with the idea that doing so will help IBM’s earnings without necessarily hurting IBM customers. The story being told to support this involves a supposed IT labor shortage in America coupled with the vaunted superiority of foreign IT talent, notably in Asia but also in Eastern Europe and South America.

Strange Labor

India, having invented mathematics in the first place and now granting more computer science and computer engineering degrees each year than does the United States is the new quality center for IT, we’re told.

Only it isn’t, at least not the way Indian IT labor is used by IBM.

I already wrote a column about the experience of former IBM customers Hilton Hotels and ServiceMaster having no trouble finding plenty of IT talent living in the tech hotbed that is Memphis, TN, thus dispelling the domestic IT labor shortage theory.

This column is about the supposed advantages of technical talent from India.

There can be some structural advantages to using Indian labor. By being 12 hours out-of-sync, Indian techies can supposedly fix bugs while their US customers sleep. But this advantage relies on Indian labor moving quickly, which it often does not given the language and cultural issues as well as added layers of management.

India, simply by being such a populous country and having so many technical graduates, does indeed have a wealth of technical talent. What’s not clear, though, is whether this talent is being applied to serve the IT needs of US customers. My belief is that Indian talent is not being used to good effect, at least not at IBM.

Cool Deception

I suspect IBM’s customers are being deceived or at least kept in the dark.

Here is my proof: right now IBM is preparing to launch an internal program with the goal of increasing in 2013 the percentage of university graduates working at its Indian Global Delivery Centers (GDCs) to 50 percent. This means that right now most of IBM’s Indian staffers are not college graduates.

Did you know that? I didn’t. I would be very surprised if IBM customers knew they were being supported mainly by graduates of Indian high schools.

To be fair, I did a search and determined that there actually are a few US job openings at IBM that require only a high school diploma. These include IBM GBS Public Sector Consultant 2012 (Entry-Level), Technical Support Professional (Entry Level) and Software Performance Analyst (Entry Level). But I have yet to meet or even hear of a high school graduate working in one of these positions in the USA.

It’s ironic that in the USA, with its supposed IT labor shortage, we can hire college graduates for jobs that in India are filled by high schoolers.

Yet in India IBM admits that the majority of its GDC workers lack university degrees. They certainly don’t advertise this fact to customers, nor do they hide it I suppose because they don’t have to.

What customer is going to think to ask for Indian resumes? After all this is IBM, right?

Yeah, right.

The most astounding part of this story to me is that one of the challenges IBM says it is facing in this project is to “establish a cultural change program to drive increased acceptance of staffing with graduates”.