IBM asks sacked employees to go to India - Views on News from Equitymaster

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IBM asks sacked employees to go to India

Feb 6, 2009

IBM is offering a choice to the employees it recently laid off in North America - work in India, Russia and some other countries. It calls the program 'Project Match' and includes moving costs and visa assistance. Interestingly, the company says that the employees should be 'willing to work on local terms and conditions'. It is not clear if that is a euphemism for 'lower pay'. This initiative has not gone down well with Alliance@IBM, the unofficial union at the company. Its spokesman has said, "IBM not only is offshoring its work to low-cost countries, now IBM wants employees to offshore themselves."

We believe this initiative highlights the compelling logic that the outsourcing model is based on. Despite the heartburn that it causes in the developed countries, it is simply too hard to ignore the value of a low-cost talent workforce reachable by modern communications.

Buffett is at it again
Warren Buffett has become an oasis of capital that fund starved companies all over the word are steadily marching to. After the American icon Harley Davidson, it is the turn of Swiss Re. As per the International Herald Tribune, the Zurich based reinsurer (it takes on insurance risk of other insurance companies) is all set to receive an infusion of US$ 2.6 bn from Berkshire Hathaway. Berkshire will buy 12% bonds convertible into shares at 25 francs after 3 years. While it is a tribute to Warren Buffett's achievement as a capital allocator, the development also indicates that the credit crisis is far from being over. Deutsche Bank's December quarter loss of US$ 6.2 bn highlights the fact.

Satyam gets a new CEO
The appointment of A.S. Murty as the new CEO of Satyam has evoked a mixed response. There are those who believe he has been a steadying influence for the company for 15 years. He has previously served as the chief delivery officer, head of HR and other business verticals. Others believe that he should not have been appointed given his proximity with Ramalinga Raju. Moreover, Mr. Murty sold 40,000 shares of the company in the days preceding Satyam's announcement of the Maytas deal.

China not so hot
There are tell tale signs that economic slowdown has hit China. And there is perhaps no better indicator of disposable income than the price of McDonalds. The company has sharply cut the prices of its offerings in the land of the dragon in a bid to stimulate demand. Others like KFC have also begun promotions for attracting the bargain hunters. This development shows, if not anything else, how economic problems that began in the US have affected patterns in buying and selling all over the globe.

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