The Industry Standard - IBM patent application diagrams method for offshoring employees - Comments

Mr. Murphy (he deserves that

Fred Cole — Mon, 06 Apr 2009 11:24:41 -0400

Mr. Murphy (he deserves that title) is a wise man. ;) Longevity in any endeavor requires 3 basic principles:
1. defined purpose
2. hard work
3. foresight to change

Americans used to pride themselves as people who built a new powerful society. Unfortunately, over the last 20-30 years we've forgotten number 3 of my bullet points. Instead of continuing to change to meet the future markets, we adapted to increase profits.

IBM used to be the only big company around to buy a PC from. They sold that unit off to China (Lenovo) after seeing their sales decline due to new "innovative" players like Michael Dell came and changed how we buy computers.

"If" IBM were to get that patent, the interesting question would be. "Would hiring illegal Mexicans in the US patent infringement? :)

Your comment lacks one

PSuark — Sat, 04 Apr 2009 16:56:42 -0400

Your comment lacks one fundamental thing, just because you buy products from American companies which does contribute to their bottom line, the revenue from those sales doesn't translate into revenue for the average American citizen. Plus we're already losing our jobs, outsourcing isn't leading to a growth of jobs held by our citizens. This is because your clothes were made in China, Mexico, India and other places, so workers in those countries get to continue to have their jobs, and our American managers do as well, but it still leaves the rest of us Americans out in the cold. When our companies have bled us dry, they'll just depend on other countries to keep them going.

Did anyone notice the

Chris — Fri, 03 Apr 2009 10:29:23 -0400

Did anyone notice the 'hotshot' from India, is only from India - he does NOT work in India? Do you think maybe he makes more money because he's NOT working in India? And why do you think he's wearing and driving American products? Maybe a better quality product? Hence, his argument?

Hey Brad. Are you hiring?

tracy — Thu, 02 Apr 2009 13:21:57 -0400

Hey Brad. Are you hiring? What kinds of skills are you looking for?

OK, I'll bite... First off

Brad Murphy — Thu, 02 Apr 2009 11:04:41 -0400

OK, I'll bite... First off the patent application was the point of the original article, but this has clearly struck a nerve on the whole issue of dynamic skill relocation in a digital economy, so let me chime in to this related perspective with a few insights from personal experience (both positive and negative).

First, I am a 2 x CEO/Entrepreneur from the IT/Software industry ( my bio is at http://www.linkedin.com/pub/0/614/511 ). I have created many jobs in my career (all high paying and virtually all here in the U.S.). In the last 7 years my business model has been focused on building mission critical / strategic / challenging software applications for leading brands (mostly Banking, Online Travel, Online Media / Web, etc.). The "offshore" trend has had a very negative short-term impact on my fortunes over the last few years. Notice I said "short term". While we are not yet out of the woods, we we're forced to respond to this migration of "work" to low cost countries by doing something as Americans we should always remember is the foundation of our GREATNESS... It's called INNOVATION! Let me explain..

I could not agree more with a prior poster that the capitalist managerial class has ruined many great companies / brands. Why? They are often robots in a broken system and in some cases even worse, they're complete idiots. I hate to sound harsh, but they wouldn't know innovation if it bit them in the arse. Example? Simple.. If a programmer in New York cost $125/hour (fully burdened, social costs, space, etc.) and a programmer in Bangalore costs $20/hour, then the Bangalore programmer must be 6x better from an economic point of view right? Seriously? No, seriously, you believe that? Scarily, that's EXACTLY what CFO's, COO's and CEO's believe. OK, here's a question... Who's to blame? Free Trade? Globalization? Emerging Countries? Nope, Nope, Nope. I'll tell you who is.... WE ARE! Don't believe me... then consider this.

I literally have the following conversation no less than twice EVERY week with a CIO and it goes something like this... So, Mr. CIO just curious what's your cycle time on software releases? Oh, we've been trying to speed up on that front.. we use to do them annually, last year we moved to twice yearly, now the business is trying to push us to quarterly, but it's damn hard.... Fair enough I say, well I’m curious, what is your current cost per delivered software feature these days? Huh? What do you mean? I mean, what is your cost per delivered feature? Uh, we don't measure that... We don't know how. OK, I ask, do you know what you're ROI profile is for each new release? UH, that's not our job, it's with the business... Our job is to keep them happy as a customer. OK I say, what can you tell me about your IT software development effectiveness... We'll we just lowered our average cost per hour dramatically last year by moving work to India and China. Really I ask? How's that going... we'll it's been difficult, but we're managing through the rough spots. Well I say, how have you had to adjust... We'll the business has had to accept a lower quality of output and in many cases less output, but we're saving a lot of money....

Is the above paragraph real... sadly, yes. Who's to blame? WE ARE... Our CIO's our CFO's and our CEO's and our Boards... My opinion? We need new leadership, new visionaries, new innovators.

My response to this nonsense is simple.. Rather than whine about low cost developers, we have been forced to innovate. We price our services based on small, increments of fully production ready, releaseable software feature sets built by Americans in American engineering centers using VERY modern automation tools and design modeling techniques and guess what? We can prove empirically that our cost per delivered working software features get delivered in 50% of the time of offshore, with a 300% better defect rate (lower) than offshore development and for approx. 20% more cost. Does every customer buy from us? Heck no, because many of them are asleep at the wheel. Who does buy? Companies that will be thriving well into the next decade because they fundamentally understand that hourly cost of software development is but one very small input into the true cost of delivering what the business requires.

Sorry for the long winded post, but it frustrates me that folks wont take this discussion up a notch and deal with the real issue... It's not about labor cost, it's about INNOVATION... in the absence of INNOVATION bureaucrats and capitalist manager types will continue the death spiral of looking for cheap labor. just my humble opinion.

As a former IBM (Rochester)

Hadad — Thu, 02 Apr 2009 09:00:58 -0400

As a former IBM (Rochester) employee, I saw this coming and I do not blame IBM. In reality they are free to do as they wish just like we are. Stop the whining and the blaming. Do what I did. If you do not like IBM get the hell out of there and do not work for them, go open your own company or do something else. Learn how to rely on yourself. I said, screw IBM and forget about it. I just do not buy or use any IBM related stuff.

So - the hotshot from India

Mary — Wed, 01 Apr 2009 20:53:44 -0400

So - the hotshot from India says protectionism is "not a one-sided game" - too bad he/she isn't honorable enough to mention that the ONLY country which doesn't indulge in some form of protectionsim is the US. Every other country realizes that it is in their best interest to keep as much of the workforce employed at decent wages as possible, and uses everything from currency manipulation to encourage buying "home made" goods, to limiting the residency of contractor workers to that country (Canada is an example there - if you admit you are crossing the border to even teach a one-week class, you are ejected), to limiting immigration, to 51% ownership (minimum) by a citizen - ETC.

He/she also neglects to admit that while they are "cheaper" so is the cost of living (in metro Denver, to simply make ends meet one must make $15-18/HOUR depending on which part of town one lives - how expensive is it to live in India).

In addition, while US IBMers for the most part have AT LEAST a decade of experience, we are being replace by people who have 1 year or less - and quite frankly, I could not do the job I do today when I had less than 1 year of experience. IBM is losing and will continue to lose its offshored accounts - I hope I live to see it!

So - the hotshot from India

Mary — Wed, 01 Apr 2009 20:53:28 -0400

Is IBM applying for a patent

d. raine — Wed, 01 Apr 2009 11:59:39 -0400

Is IBM applying for a patent to cover statistical math procedures that have been in use for... forever?
Heaven help us all if it's come down to this.

Isn't it a skosh early for

Chance Abattoir — Wed, 01 Apr 2009 00:46:08 -0400

Isn't it a skosh early for April Fool's?

Looks like foot in

Adi — Wed, 01 Apr 2009 00:00:51 -0400

Looks like foot in mouth.Lets see who is gaining most out of outsourcing.US companies sheds there low quality and low importance job to countries like India,China etc.Now first they are saving there precious time doing some useless job instead create some more product to be maintained , second the profit generated are directly going back to people there (ya as always remaining in few pockets) ,third reducing the operation cost and hence cost of products not increasing as it should be, fourth you people just spoiling the good and the bad brains in those countries for your own good(Just look at work they are doing , and they are called as software engineer or computer engineer lol ) , fifth this is double talk , when you cry about this , because people seating in US are the biggest profit makers out of all this.In world which software engineer will like to do data entry or creating or maintaining stupid web pages,Yes when time become bad people start looking for reasons, and reason to blame others.US is biggest defaulter and root cause of all this.You try to eat everything that you can grab, and at some point of time that will stop going inside right.So cheers guys , find something more to blame.

I am from India and work for

Jai — Tue, 31 Mar 2009 23:30:47 -0400

I am from India and work for an IT consulting company in the R&D division. I also have a PhD from a prominent business school. Let me give a sample list of my personal possessions: The car i drive is Ford, my phones are iPhone and Blackberry, my shirt is by Polo and trousers is from Dockers, watch is Pierre Cardin. I am assuming that by using these products I am contributing to the bottom line of many of the above so called American and global companies. Imaging the scenario when as a protectionist measure, rest of the world stops buying American products. Who will suffer. Not me coz I will shift to a locally produced product. Who will lose his/her job?. Ladies and Gentlemen, protectionism is not a one sided game. If everyone starts it, then we can only imagine the consequences.

Currently working in a 2M€

WorkingWithOS — Tue, 31 Mar 2009 17:48:19 -0400

Currently working in a 2M€ SW project with Indian company providing solution design & implementation. Takes appr. 5 times more effort from tour side to get (explain requirements documentation, review their design, re-explain our requrements, test, re-test, explain again our requirements etc.) what we want compared to offshoring with e.g. Hungarians or Slovakians.

Finally we had to import UI & DB architects to Finland, just to ensure quality of their design, under our direct f2f supervision. Literally, I'm having a "personal Indian SW architect" in my office nowadays

Just to mention, these Indian guys were educated in US :-)

I agree with IT Worker, I

WorkedwithOffshore — Tue, 31 Mar 2009 15:07:29 -0400

I agree with IT Worker, I have worked on several projects with offshore resources and the work had to be re-done 3-4 times just to meet our US quality standards. The offshore resources do not have the same level of motivation or the expertise to deliver as US resources do.

Other governments have

Enough — Tue, 31 Mar 2009 15:01:51 -0400

Other governments have already figured this out. In Germany it takes 3 years to lay off an employee.. In India, no investments made there can leave the country.. The US government is the one who is screwed up..

IBM patent application diagrams method for offshoring employees

Paul Boutin — Mon, 30 Mar 2009 13:01:44 -0400

The world's largest IT services company is attempting to boost its creative cost-cutting techniques with a patent application -- number 20090083107 at the U.S. Patent & Trademark Office -- for a "method and system for strategic global resource sourcing." (Yes, "resource sourcing.") In short, IBM wants to patent its math for deciding where to offshore staff.

A patented methodology for deciding where to send jobs overseas to cut costs would be a valuable tool that IBM could sell to its corporate clients. But IBM has plenty of opportunity to eat its own dog food: The company continues to slash its own payroll, starting with 4,600 cuts earlier this year and continuing with a huge layoff within its 180,000-employee global business services group leaked to the Wall Street Journal last week.

Project Match, an IBM offshoring initiative the Standard reported on last month, offers U.S. employees the chance to stay with IBM by relocating to another country, to work in an IBM regional division at local wage rates. IBM has roughly 400,000 employees in 170 countries. As of early February, fewer than ten employees had shown interest in the program.

To be honest, I can't quite follow the application's dense language describing how the system works and what's uniquely special about it. But Figure 2 from the paperwork, below, gives a pretty good idea of what's involved.