In a symbolic shift, IBM's India workforce likely exceeds U.S.

IT salaries in India for all firms close to minimum wage in America

There is a difference in the way U.S. and Indian IT firms report their headcounts, and it tells a lot about globalization.

Indian firms diligently report hiring quarter-to-quarter. It's a key metric and a source of pride. Among those providing detailed data is India IT services firm Tata Consultancy Services. It employs about quarter of a million people, with about 90% of their workforce counted as Indian.

In the U.S. it's different story. The big IT firms, Hewlett-Packard, Dell, Oracle and most others, with the exception of Microsoft, only provide global headcounts, and not country breakouts.

When HP, for instance, announced global layoffs earlier this year, it did not detail how many U.S. workers were getting cut.

For years, IBM was an exception to this industry practice. It reported its U.S. employment until 2010, when it released its annual report without a U.S. headcount breakout.

The last time that IBM made a public statement about its U.S. workforce was in congressional testimony in the fall of 2009, when it put its U.S. workforce at 105,000. It was at 121,000 at the end of 2007, and more in previous years.

At the time that IBM stopped reporting its U.S. headcount, it was beginning to appear that India was on trajectory to surpass its U.S. workforce. Crossing such a threshold is a symbolic shift more than anything else -- a globalization footnote. With a global workforce of 430,000, less than a fourth of IBM's employees are in the U.S.

According to an internal document obtained by Computerworld, IBM has 112,000 workers in India, up from 6,000 in 2002. IBM won't comment on this document or authenticate it, so this information has an asterisk next to it.

But there's also little that is surprising about this data. It has been widely expected over the past year or two that IBM's India workforce was on track to exceed its U.S. workforce, if it hadn't exceeded it already.

In early 2010, for instance, The Times of India reported, without naming sources, that IBM had more than 100,000 workers in India.

The only source today of IBM U.S. employment data is from the Alliance@IBM/CWA Local 1701, which puts the U.S. headcount today at about 92,000.

The average pay for all IBM workers in India was at $17,000, according to the document. That may seem shockingly low to U.S. IT workers, but it is in alignment with IT wages in India.

The Everest Group said the annual wages generally in India for a software engineer range from $8,000 to $10,000; for a senior software engineer, $12,000 to $15,000, and between $18,000 and $20,000 for a team lead. A project manager may make as much as $31,000.

The wage data is also supported on sites such as PayScale, which, for instance, list the average pay for a senior software engineer developer in India at $10,519.

Other U.S. IT firms have expanded in India as well to take advantage of lower wage rates and its educated workforce, so IBM is hardly alone here. IBM has also expanded in India because of the opportunity created by that country's economic growth.

Although IBM does not provide specific breakouts of its business in India, it has made a steady stream of customer announcements ranging from data centers projects, to hardware and software platforms, as well as services at a string of major Indian firms, including Tulip Telecom, Nakoda Textiles, DPSC (Dishergarh Power), Ester industries, and Thriveni Earthmovers.

IBM does report revenue growth for the so-called BRIC countries -- Brazil, Russia, India and China. In its last full fiscal year, 2011, it said revenues in those countries increased 19%, while revenues in the Americas were up 7%.

The Indian IT market is about $100 billion, according to Nasscom, an India-based industry group -- a relatively small amount. IBM last year reported its full year Americas' revenues at nearly $45 billion, and total revenues at nearly $107 billion.

Former IBM CEO Sam Palmisano outlined his vision for India in 2006, in Bangalore before 10,000 IBM employees. It called for attacking the challenge from Indian services firms on two fronts, by reducing the cost of services as well as positioning the company as a top IT provider in India.

Ron Hira, a public policy professor at the Rochester Institute of Technology, believes the impact of IBM's outsourcing model on the company's bottom line shows up in the cost of goods sold, which includes labor costs, which went from 57% in 2003 to 47% in 2011.

IBM is a "good microcosm for the American economy," said Hira, "with increasing corporate profits, higher stock prices, and a weak U.S. labor market."

Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His e-mail address is pthibodeau@computerworld.com.

See more by Patrick Thibodeau on Computerworld.com.

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