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    IBM and Offshoring

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    Please read the attached exhibits about IBM, and answer the following two questions:

    1. Is IBM' growth in employment in countries, such as India and Eastern Europe, inevitable given labor cost differences? How does this relate to Mr. Palmisano's comments in Exhibit 1?
    2. What is your reaction to the critical comments made by the Alliance IBM spokesman, including the comment about asking employees to "offshore their citizenship"?

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    Solution Preview

    1. Yes, I think that growth in employment in countries like India is inevitable, not only on account of labor cost differences that forces companies to shift their jobs to India to take advantage of the low labor cost and a strong, English-speaking and qualified labor force, but also on account of the growing economy and strong GDP growth rate and increasing disposable income, living standard and quality of living in countries like India. Many global companies want to exploit strong growth opportunities in countries like ...