Many US companies have become global players. The technology giant IBM employs o

Question

Many US companies have become global players. The technology giant IBM employs over 465,000 people and has revenues of roughly $100 billion. Although IBM’s headquarters is in Armonk, New York, the vast majority of its employees (more than 70 percent) actually work outside the United States. IBM, like many other US-based multinationals, now earns the majority of its revenues (roughly two-thirds) outside the United States[1]. IBM’s revenues in the BRIC countries have been growing at between 20 and 40 percent per year, while they have grown by only about 1 to 3 percent in developed markets such as the United States. IBM’s goal is to obtain 35 percent of its total revenue from fast-growing emerging economies such as the BRIC countries by 2015. To capture these opportunities, IBM (along with many other multinational companies) has been reducing the US headcount while increasing employment in emerging economies such as India.

Is there any special consideration a firm should have for its “home country”? Is it ethical to lay off workers in the US while hiring overseas? What about keeping profits outside the US in offshore accounts to avoid paying corporate taxes?

Explanation / Answer

Today in the era of globalization when everybody is preaching that there is a global village and the world is not oval it is flat, a company will put its resources in those places where the potential is higher and it can grow in that market. In this way there should not be any consideration that a form should have some predefined number of employees for its home country.The growth number of the firm is coming from other economies so it should be made mandatory that in those countries a minimum number of employees should be employed. Another thing to be noted is that MNCs are not social organization they are created for profit so we should not add social features in an MNC.There is the government at different level to look into social issues and tax payers are paying for it. There is no ethical issue if the firm is hiring overseas because it runs only in simple logic of demand and supply. If demand is higher in overseas then it will employ more but it should not in the cost of laying workers in US forcefully.The company will try to reduce cost and corporate tax is also a cost for the company.These companies are operating under tha law of the land so to discourage such thing either corporate tax should be rationlized or law should be made that any US based company cannot do this.

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