IBM is facing an investigation from Depatment of Justice (US) for its competition killing practices in Mainframe space. Earlier IBM used to license its Mainframe software to be run on Non IBM hardware, but sometime back IBM withdrew such offers and now completely dominates the hardware segment of Mainframes.
Also one more claim is that since many Major clients have written complex business code on Mainframes and IBM has made it very difficult to port these applications to another vendor say Oracle or Microsoft.
T3T a smaller company is pursuing a case against IBM in this regard but was rejected by the court recently. But now Justice department has taken the matter. Earlier Platform Solutions sued IBM but later was purchased by IBM and hence ending any chance of legal battle.
Now the Computer & Communication Industry Association (CCIA) which includes Oracle,Microsoft,Google ,Redhat among others has been asked to provide inputs on the investigation by Dept of Justice.
After Obama’s very controversial bill aimed at stopping job losses to Overseas markets like India, many IT professionals in India are worried what will be the impact on them. Nasscom has come out and said Indian companies wont be impacted but this is a protectionist approach from Obama. To a certain extent this move wont affect India based IT companoies like TCS,Infosys, Wipro and others. But this will definitely impact the revenues of tier 1 MNC’s like IBM,EDS,Oracle and Microsoft.
The proposed tax changes if passed could increase their corporate taxes by 10% which is sizeable margin for these players. Though they will be affected many might not simply abandon countries like India. IBM can get the same work done in India for 10-20% of the cost in US. So in near term there wont be immediate job losses in India.
But these companies might rethink their aggressive expansion plans in India, If Obama gets his way in this bill, He surely will put more restrictions on Offshoring of the from US. Especially companies which are getting federal funds are already under tremendous pressure not to offshore any new work to India.
But then if Obama decides to go further down the same line, it can end up disastrous for US economy. These companies like IBM,EDS will lose out to their Indian counterparts by not able to match their low bidding prices/scalability. Other companies like Banks and Automakers if forced to hire local talent at 10 times more cost will again become uncompetitive against their global opponents. Hopefully Obama will listen to some sound advice else he will end up creating another country like USSR and fail completely.