by Beth Bacheldor

IBM Scores Outsourcing Deals, Plans New Hires – Is this Good News?

Dec 27, 2009
IT Leadership

In late December, IBM announced three outsourcing deals, one worth $83 million. It also plans some new hires. What’s it all add

IBM is wrapping up 2009 with a few new outsourcing deals. One, announced Dec. 22, is a 10-year, $83-million deal with Digicable, an Indian cable and broadband distribution company in India. One day later, on Dec. 23, IBM announced its contract to provide IT services to Discover Financial Services has been extended through 2015. On Dec. 21, IBM said it signed an eight-year agreement with Essex County Council in the United Kingdom that will include the design, management and delivery of front-end customer services, back-office and corporate systems; together with business consulting and technology. These deals are good news for IBM, and for the outsourcing market in general. They’re even good news for the overall health of the economy.

But are they good news for the many U.S. tech workers laid off in 2009? It’s not likely. The Indian deal, after all, will probably be handled by IT workers in India. The deal in the United Kingdom will employ U.K. workers. And the Discover Financial Services deal should mean only (but there’s no guarantee) that current IBMers will keep their jobs.

There was glimmer of good news out of IBM related to U.S. workers, but not specifically U.S. IT workers. Zacks Equity Research reported on Dec. 24 that IBM plans to hire 500 customer-service reps and train them at a new call center its building in Boulder, Colo. IBM already has about 2,800 employees at the site. What’s good about this—not just the new hires, but the new data center—is that IBM could have built that call center offshore.

What apparently happened, however, is IBM decided to take advantage of tax rebates from the city of Boulder, tax rebates based on social, community and environmental criteria. The Colorado state government also threw in some incentives, according to Zacks.

A few days ago, I blogged about an interview ComputerWorld did with Ron Hira, Rochester Institute of Technology professor and author of Outsourcing America (co-written with his brother, Anil Hira). In the interview, Ron Hira offered that the solution to offshoring, and the undermining its technological and economic future. Hira believes that the solution to offshoring American jobs lies in the hands of the government, which should close tax loopholes that encourage offshoring and offer tax incentives for companies that keep work here. I agreed, but was somewhat circumspect. I take it back. I mean, it worked on IBM, after all.

Some 3,000 new IBMers doesn’t come close to making up for the nearly 10,000 that lost their jobs in 2009. But it does help.