Ibm Corporation

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?

When IBM pulled out of India in 1978 in protest of new government regulations, it opened up the nascent Indian tech market to local players. Some of them grew up to be the tigers of the country's fast-growing software and tech services industries, including Infosys (INFY), Wipro (WIT), Tata Consultancy Services, and HCL Technologies. Now, those outfits are some of IBM's toughest competitors.

I do agree with IBM's employment response to competition from software development contractors. IBM is under pressure to lower the costs of service delivery. Until the Indian software services companies emerged as serious rivals two years ago, its huge services workforce was distributed primarily within the regions where the work was done. One result was that its compensation costs and therefore prices were high. With the tech bust and the rise of the Indians, that strategy no longer worked.

So IBM was in the middle of a massive retooling and migration of its workforce. It fired 14,000 services employees in Western Europe, the U.S., and Japan, even while it's hiring in India and Eastern Europe (IBM, 2010).

2. Will IBM's plan to give away some of its IT assets and intellectual property and 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?

IBM's plan to give away some of its IT assets can be successful growth strategy in the “competitive marketplace" in which it operates. The Indian competitors are expanding their own workforces in India and setting up programming and call centers elsewhere, as well. So far, though, according to analyst Bill Martorelli of Forrester Research; they're not in the same league. They don't have consulting, and...