Question

How does IBM outsource? What do they outsource? Does it benefit/harm them to outsource?

Answer 1

IBM, being an American Company, concentrates upon its core operations only in America. However, a significant amount of its operations are outsources across the world. The major part of its research is not outsourced to anyone and is undertaken in their Headquarters in America. They outsource their old businesses to the developing countries of the World because they can avail the same at a lower cost. The computer programming activities are outsourced because it could be described in the math-based rule and therefore any skilled workers sitting at any part of the world, can share the same to IBM over the internet platform. Further, they collaborate with various market leaders in order to undertake the transformation of networks to hybrid cloud computing by application of innovative software defined technologies.

However, it has not always benefitted the Company to outsource its operations as the Operating margins have continued to decline over a period of time. Further, IBM is also not left with much resources that could be in turn utilized to undertake the business initiatives. This has impeded their transition speed from their traditional businesses to the modern newer business segments. Outsourcing usually gives advantage to the first-movers in the market but the other Companies can adapt to it. In this regard, IBM does not gain any sustainable Competitive advantage through outsourcing.