IBM Corporation: Competing Globally by

Offshoring IT Workers and Giving Away Technology

Group 5Macky Villagarcia

Martin ReyesMichelle ZhouSteven SuikiWinnie Ren

Sanaz Sadeghi

14 Feb 2011

Topic Outline: Case Background

Case Study Questions

Real World Activities

Case Background IBM’s gamble – giving away crown jewels (intellectual

property in the form of software, patents, and ideas) “Openness” - Collaborating w/ customers and rivals to

invent new technology Gives away a technology but w/ intellectual property &

enterprise that will enable it to make money if the tech is widely adopted

April 2005 – eliminated 14,500 jobs mostly in India IBM’s move to “strategic low-cost geographies” July 2005 – Bob Moffat (SVP) was assigned to handle

“global delivery model” To cut cost of delivering services, even high-value ones, by

tightening the “services supply chain”

Case Study Questions

1. Do you agree with IBM’s employment response to competition from software development contractors in India, like Wipro, that are expanding into IT consulting services? Why or why not?

Yes Necessity More economical and efficient Done within the law – proper

separation pay were given

2. Will IBM’s plan to give away some of its IT assets and intellectual property, as well as increase its support of open-source software products like Linux, be a successful growth strategy in the “brutally competitive marketplace” in which it operates? Why or why not?

Yes More people having access =

bigger market Awareness of other IBM products Provides competitive advantage Limited assets only – VP

Intellectual Property filters

3. Do you agree with IBM researchers’ assumption that IT will remain “hard to use, expensive, and labor-intensive, w/ customers continuing to need help solving business problems” for a long time to come? Should IBM bet its business on that assumption? Defend your answers to both questions.

hard to use, expensive, and labor-intensive – NO Advancement in technology – more user friendly Cloud computing and the likes

w/ customers continuing to need help solving business problems – YES IT would always need experts to plan, develop,

design, program, maintain, and support it Practicality – Business’ core competency

Yes. Services is now IBM’s core competency and has the resources and capabilities to sustain this

Real World Activities

IBM Wipro

INR 38,999,000 = USD 842,200,00

Accenture

http://www-935.ibm.com/services/us/gbs/applicationmanagement/pdf/forrestser_wave_north_american_applications_outsourcing_2010_final.pdf

http://www.iaop.org/Firmbuilder/Articles/19/205/2047/Default.aspx

Discuss the implications of offshoring for your current or future career choices & the kinds of companies or organizations you would want to work for.

As of the moment, we are benefiting from offshoring as business continues to flock in our country.

However, this would always keep us on our toes as we would need to sustain our marketability and competitive advantages.

IBM Corporation: Competing Globally by

Offshoring IT Workers and Giving Away Technology

Group 5Macky Villagarcia

Martin ReyesMichelle ZhouSteven SuikiWinnie Ren

Sanaz Sadeghi

14 Feb 2011