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March 30, 2009 (Computerworld) IBM last week filed a patent application for an
offshore outsourcing methodology that is intended to help companies minimize
the financial risks associated with sending work overseas.
The patent application describes a computer-driven approach for putting values
on both the quantitative and qualitative attributes of a "global resource
sourcing strategy." For instance, the methodology takes into account the
language skills and morale of offshore workers, as well as a list of the hard
numbers involved in setting up an offshore operation, including labor rates and
currency valuations.
In short, IBM is attempting to reduce offshoring considerations to a mathematic
model — or, in the words of the application, "a robust and reusable sourcing
template" for identifying and analyzing "global resource pools."
For IBM itself, the patent filing couldn't be any timelier. The company
submitted the application to the U.S. Patent & Trademark Office last Thursday,
the same day it confirmed that it is eliminating more jobs in its North
American operations.
IBM didn't disclose any details about the planned cutbacks, but allia...@ibm, a
union local that isn't recognized as an official bargaining unit, has said it
expects between 4,000 and 5,000 workers to be let go. The union thinks the cuts
are part of a plan by IBM to send more jobs overseas, following an earlier
round of reductions in January.
In the patent application, IBM said the described methodology "allows
decision-makers to conveniently trade off one or more qualitatively defined
levels between one or more factors in terms of quantifiable, direct, costs."
The methodology also looks at some scary assumptions as part of its
mathematical models — scary, that is, if you're a U.S.-based IT worker. In a
hypothetical assessment, the application sets up an example that includes a
company having "50% of resources in China by 2010."
Here's an example of the specific metrics that the methodology takes into
account:
Suppose that employees hired in country A possess level 1 communication skills,
while employees in country B possess level 2 skills.
Additionally, suppose that the job satisfaction of employees hired in country A
is rated to be at level 2, while that of employees hired in country B is rated
at level 1. In this case, a lower score implies higher job satisfaction.
Since communication skill levels and job satisfaction levels can't be directly
compared, it's useful to quantify in terms of cost the differences between the
levels, both within the same factor and across different ones.
The patent application explains why IBM thinks it's important to look at a
broad range of variables when making global sourcing decisions. By simply
looking at wages and material costs, "the organization may indirectly increase
other costs such as those associated with poorer quality workers and/or
materials," IBM said. That could include loss of customers, lower productivity,
increased product returns and higher worker attrition, the company said, adding
that a company "needs to consider both direct and indirect costs associated
with its resources."
This isn't the first time that IBM has filed for a patent related to an
offshoring methodology. An application filed in 2007 described a
software-driven approach "for identifying at least a portion of a
human-resource within an organization for outsourcing."
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