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In a symbolic shift, IBM's India workforce likely exceeds U.S.

Patrick Thibodeau | Nov. 30, 2012
It has been widely expected over the past year or two that IBM's India workforce was on track to exceed its U.S. workforce, if it hadn't exceeded it already.

The wage data is also supported on sites such as PayScale, which, for instance, list the average pay for a senior software engineer developer in India at $10,519.

Other U.S. IT firms have expanded in India as well to take advantage of lower wage rates and its educated workforce, so IBM is hardly alone here. IBM has also expanded in India because of the opportunity created by that country's economic growth.

Although IBM does not provide specific breakouts of its business in India, it has made a steady stream of customer announcements ranging from data centers projects, to hardware and software platforms, as well as services at a string of major Indian firms, including Tulip Telecom, Nakoda Textiles, DPSC (Dishergarh Power), Ester industries, and Thriveni Earthmovers.

IBM does report revenue growth for the so-called BRIC countries -- Brazil, Russia, India and China. In its last full fiscal year, 2011, it said revenues in those countries increased 19%, while revenues in the Americas were up 7%.

The Indian IT market is about $100 billion, according to Nasscom, an India-based industry group -- a relatively small amount. IBM last year reported its full year Americas' revenues at nearly $45 billion, and total revenues at nearly $107 billion.

Former IBM CEO Sam Palmisano outlined his vision for India in 2006, in Bangalore before 10,000 IBM employees. It called for attacking the challenge from Indian services firms on two fronts, by reducing the cost of services as well as positioning the company as a top IT provider in India.

Ron Hira, a public policy professor at the Rochester Institute of Technology, believes the impact of IBM's outsourcing model on the company's bottom line shows up in the cost of goods sold, which includes labor costs, which went from 57% in 2003 to 47% in 2011.

IBM is a "good microcosm for the American economy," said Hira, "with increasing corporate profits, higher stock prices, and a weak U.S. labor market."


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