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IBM escalates outsourcing to India and China

Ed Frauenheim CNET News.com

Published: 17 Dec 2003 08:50 GMT

IBM is declining to comment on a report that it plans to move the work of as many as 4,730 programmers to India, China and elsewhere, but it said this week it expects hiring next year in the United States to equal or increase over 2003 levels.

The Wall Street Journal reported this week that Big Blue has told its managers to plan on shifting the work of thousands of programmers to foreign countries. The story referred to company documents and said the plan involves people in IBM's Application Management Services group.

IBM, which employed a total of nearly 316,000 workers at the end of 2002, said in a statement that it does not comment on "internal presentations or projections." But according to the statement, "the vast majority of the growth in application services that will occur in markets like India, China and Latin America will result from winning new contracts." By "markets," IBM is referring to where the services will be provided from, not the location of the customer, said company spokesman James Sciales.

IBM also said that "on a percentage basis, our forecast is for hiring across the Americas to outpace the hiring in the rest of the world." Sciales declined to give a specific number for what US hiring will be in 2003.

IBM's hiring plans are more fuel for a controversy over the practice of sending information technology work to lower-cost regions of the globe. Forrester Research has estimated that the number of computer jobs moving overseas will grow from 27,171 in 2000 to a cumulative total of 472,632 by 2015. So-called offshoring of IT work has come under criticism in light of job cuts in the US tech sector.

On Tuesday, a union group trying to organise workers at Big Blue said IBM's alleged plans reported by the Journal reflect the tip of the iceberg.

"We are hearing that the number of global services jobs that will be offshored is about 40,000 by 2005," said Lee Conrad, national coordinator of the Alliance@IBM, which is a branch of the Communications Workers of America. IBM's global services wing handles tasks such application management, business consulting and training.

IBM's Sciales declined to comment on the Alliance's projection. But he said Big Blue has long been international in scope. More than half of the company's employees are located outside the United States, he said.