IBM Wins Outsourcing Work From Indian Company

[OhioChick]

Source: Forbes

03.21.07, 7:06 PM ET

MUMBAI - Here’s a twist: an Indian company outsourcing operations to an American one.

IBM (nyse: IBM - news - people ) on Wednesday said it had won a 10-year contract from Indian mobile network operator Idea Cellular valued at between $600 million and $800 million.

IBM will help handle services like billing, revenue assurance, credit collection and subscriber management, and manage the Indian company’s IT infrastructure.

The deal is based on a risk-reward revenue sharing model and revenues are to an extent dependent on the revenues and expansion of Idea Cellular, India’s fifth-largest mobile operator with 14 million subscribers.


Read more: http://www.forbes.com/markets/economy/2007/03/21/ibm-india-idea-markets-equity-cx_rd_0321markets26.html

[ChromeFoundry]

1. But didn't Gates state there was no talent here???

IBM must not have gotten that memo...
Maybe they will need more H1B workers from India to fill the positions of the outsourced Indian jobs, here in the US because they don't have enough workers there because the good ones are here (i cannot even follow that logic)? Or maybe this global economy is a fucked up mess and the left hand doesn't know what the right hand is doing.

[PaulaFarrell]

3. Doesn't say the employees will be American

According to the article IBM has 53000 Indian vs 125000 US employees. SO my guess would be that the work will still be done in India, just a US company pocketing the profits.

[pampango]

4. You're right that the employees might not be American.

It is an "outsourcing" deal so it figures that they won't be Indian anyway. We will probably never check back on this, but it would be interesting to see where this work ends up being done.

You are also right that wherever the work ends up, the profits (or losses) will end up with a US company. There are several threads in GD now about the automobile industry. There is someone who seems to have posted a hundred times that it doesn't matter that Toyota, Honda and other Japanese car companies build cars here and hire Americans. What is important is that the profits go back to Japan instead of to GM, Ford, etc. This IBM deal would be kind of the reverse of that.

[PaulaFarrell]

6. Outsourcing only means hiring an outside company

It doesn't mean the company is foreign or that the work will be done in a foreign location. I think they usually refer to 'off-shoring' when the outside company/workers are foreign.

I personally think where the workers are located is just as important, if not more so, than where the profits go. After all, only a small % of the turnover of a company is actually profit.

[pampango]

11. Thanks for the information. I did not know the distinction

between outsourcing and off-shoring. I know I have used the former incorrectly many times here at DU. :headbang:

[razors edge]

2. They must have

locked in a deal for a lot of HB1 visas.

[WilmywoodNCparalegal]

5. I work in Immigration for the aforementioned company

all immigration activities are headquartered in RTP, NC. All employees from IBM subsidiaries in India come on L visas. Hardly anyone from India comes in on a H-1B. The reasons are a few: firstly, Ls are less expensive; the aforementioned company has blanket Ls which have been pre-approved for an unlimited number of intracompany transferees; secondly, with an L there is lesser risk for an employee to switch to a competitor company. Those whom the aforementioned company wishes to procure permanent residence are very very few.

By the way, the aforementioned company outsources most of its HR and immigration to a temporary agency. In fact, I am technically an employee of that agency.

[Javaman]

7. does this mean they have to start training american workers to

speak hindi?

american operator working first day on job. answers the phone.

American operator: good calling New Delhi imports, for help you I can better serve?

[WilmywoodNCparalegal]

8. ROFL

that was funny... I think my favorite India-speak IT term is 'enhancements' to software applications.

[WillYourVoteBCounted]

9. IBM employs about 53,000 people in India

: {

IBM employs about 53,000 people in India, second only to the U.S., where it has 125,000 employees. At IBM’s annual investor meet in Bangalore last year, CEO Sam Palmisano had said the company would invest $6 billion in India over three years through 2009 to expand service centers catering to customers globally....

With the economy growing rapidly, a number of Indian companies have expanded to the point where they too are farming out support services to local partners or multinationals with Indian operations.

[LeftHander]

10. They won by outsourcing to Pakistan.....

:?/