News headlines announce that Big Blue has acquired an Indian outsourcing firm called Daksh, which specializes in outsourced call center workers. The news could come at a better time -- another current news story describes a rather upsetting scenario in which some displaced workers have been charged with training their own replacements from overseas.
The IBM news hit the wires without the benefit of the usual precursor: the corporate press release. (It's not hard to imagine why a press announcement was lacking, given the issue.) According to news agencies, IBM will likely pay between $150 million to $200 million for the third-largest back-office services firm in India. Daksh already provides call center services to 13 U.S. companies, including Amazon
The outsourcing controversy has reached a fever pitch recently, with strong and emotional arguments, both pro and con. On the one hand, it's seen as a way that companies can improve their profitability. Also, pundits say that throughout modern history, there have been major shifts in employment here in the U.S., always revealing another job boom that has led to an ever-increasing quality of life.
On the other hand, it's hard to make such arguments when unemployment in this country remains high. Pavement pounding probably feels like a vain attempt for the unemployed among us who hear that jobs for which they would otherwise qualify are being shipped overseas. And most of us probably know at least one, if not many, IT workers who are either unemployed or fear the imminent export of their own jobs.
Why is the move wise? Outsourcing to India and saving cash can boost profits. If IBM can provide services related to the desire for cheap labor, then surely this will boost its revenues. (Keep a close eye on the political and public relations pressures, though.)
On the other hand, I have my own questions about outsourcing. I understand the market view on profitability, and getting the best possible work done the cheapest way is key. However, I have heard of instances where outsourced work hasn't been the best quality -- sometimes cheapest isn't necessarily the best, after all. With outsourced workers from other countries, that simply may be a result of something as simple as language barriers.
So, if call center employees, software coders, etc., aren't up to the task -- regardless of what side of the ocean they're from -- customers complain and defect, and companies suffer. And that's not the road to sustained profitability.
What do you think? Are you disappointed in IBM's purchase? Is Big Blue rolling with the times with a stellar move, or is this a bad move replete with political and social repercussions? Share your views with other Fools on the IBM discussion board.
Alyce Lomax does not own shares of any companies mentioned.