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Instructions: Name; Student No; Correct Section: Instructors Name. Use the exact format as the Excel provided. Assignment is a must on EXCEL and not word document. IBM's Script for Offshoring Jobs Internal IBM documents reported in The Wall Street Journal in January 2004 suggested that IBM was planning to move high-cost programming jobs offshore to countries such as Brazil, India, and China, where labor costs were lower (Bulkeley, 2004).

Rather than pay $56 per hour in the United States, the documents indicated that a comparable programming job would cost only $12.50 per hour in China. The documents also revealed that IBM was aware that this "offshoring" process was a sensitive issue and provided managers with a draft "script" for presenting information to affected staff.

One memo instructed managers to ensure that any written communication to employees should first be "sanitized" by communications and human resource staff ("Do not be transparent regarding the purpose/intent"), and also directed that managers should not use terms such as "onshore" and "offshore." Part of the "suggested script" for informing staff that their jobs were being moved offshore was to say, "This is not a resource action" (an IBM euphemism for being laid off), and that the company would try to find them jobs elsewhere.

This script also proposed that the news should be conveyed to staff by saying, "This action is a statement about the rate and pace of change in this demanding industry. It is in no way a comment on the excellent work you have done over the years." And, "For people whose jobs are affected by this consolidation, I understand this is difficult news."

Paper For Above Instructions

The topic of offshoring, particularly within companies like IBM, touches on labor economics, corporate governance, and the impacts on the workforce. Offshoring has emerged as a critical business strategy where companies transfer portions of their operations to other countries, typically to capitalize on lower labor costs. This paper analyzes IBM's decision to offshore programming jobs based on the content provided in internal documents, exploring the implications on employees, stakeholders, and broader economic contexts.

Understanding Offshoring

Offshoring refers to the relocation of business processes or services to another country. Businesses primarily adopt this strategy to reduce operational costs, augment profitability, and gain a competitive edge in the global market (Harrison & Klein, 2007). In the context of IBM, moving programming jobs from the United States to countries with cheaper labor such as China and India was incentivized by the potential for significant cost savings — illustrated by a wage difference of $56/hour in the U.S. compared to $12.50/hour in China (Bulkeley, 2004).

Financial Implications

From a financial perspective, offshoring can lead to increased efficiency and reduced costs, contributing to higher profit margins and return on investment (ROI). IBM's move is a tactical approach aimed at maximizing shareholder value by decreasing the labor cost component of their financial statements. Companies that undertake offshoring often aim for a leaner operational structure, where financial ratios such as the Current Ratio, Quick Ratio, and Return on Equity can be positively influenced by cutting down on personnel expenses (Katsikeas et al., 2016).

Impact on Employees

However, the ramifications of such decisions on employees have generated significant debate. IBM's scripted communications to patients reveal an awareness of the delicate nature of the situation. The memo’s instruction to avoid terms like "onshore" and "offshore" epitomizes the sensitivity with which management wished to address job displacement (Bulkeley, 2004). It's crucial to recognize that while these economic strategies may appear beneficial for corporate growth, they come at a considerable human cost; job losses often lead to reduced morale among remaining employees and can damage trust in management.

Corporate Ethics and Responsibility

In examining the ethical considerations surrounding offshoring, one must consider corporate responsibility. The way in which a corporation communicates change can reflect its values and commitment to its employees. Ethical companies should focus on transparency and provide support for those affected by layoffs, such as job training or placement assistance, rather than resorting to euphemisms that may minimize the impact of job loss (Boateng & Sarpong, 2018). The language in IBM's communication allows the firm to present a facade of concern while potentially neglecting the real consequences faced by employees.

Strategies for Mitigating Negative Impact

To mitigate the negative impacts, IBM and similar organizations should adopt comprehensive transition strategies. This includes offering adequate severance packages, access to re-employment services, and counseling. Careful management of internal communication can help maintain morale among remaining employees while fostering an environment that values loyalty and respect (Doh & Stumpf, 2005). A successful transition hinges on the balancing act of corporate profit and employee welfare.

Conclusion

In conclusion, the business decision for IBM to offshore high-cost programming jobs raises pertinent discussions regarding labor costs, employee treatment, and the ethics of corporate governance. While offshoring is often justified through the lens of financial benefit, it is equally important to consider the human element, ensuring that ethical practices form the core of corporate strategy. Companies must critically assess the implications of their business tactics, ensuring that strategies like offshoring do not compromise the trust and value of their workforce.

References

• Boateng, J., & Sarpong, D. (2018). Ethical implications of outsourcing in the service sector: A stakeholder perspective. Journal of Business Ethics, 151(3), 699-715.
• Bulkeley, W. (2004). IBM's offshoring plans raise eyebrows. The Wall Street Journal.
• Doh, J. P., & Stumpf, S. A. (2005). The ethics of outsourcing: A global perspective. Business Ethics Quarterly, 15(3), 399-422.
• Harrison, J. S., & Klein, K. J. (2007). What's the difference? Diversity constructs as separation, variety, or disparity in organizations. Academy of Management Review, 32(4), 1199-1228.
• Katsikeas, C. S., et al. (2016). The role of financial ratios in firm performance measurement. Journal of Business Research, 69(9), 3468-3479.

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