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GE, IBM shifts focus from India to Hungary – a new trend or just isolated cases?
IBM has decided to create 700 jobs in Hungary for service outsourcing activities. GE recently sold its outsourcing hub in India while operating service outsourcing hub in Hungary. East Europe is providing one interesting scenario for these companies. When IBM takes jobs to Hungary instead of India, not many start complaining. The reason behind this may be India’s NASSCOM the industry association for IT and BPO companies. These industry associations have created a perception among US people and political leaders that India is stealing all the jobs from US. US Corporations are weary about that scenario. For example, pension funds holding billions of GE or IBM stocks do not like the idea that IBM or GE takes jobs to India or China. When these countries decide to expand in countries that do not boast as “job stealers”, nor one really takes notice.
Computer giant IBM will create 700 service center jobs in Hungary in a 6.5-billion forint ($35.54 million) investment, the Ministry of Economic Affairs said on Thursday. IBM will create mostly financial services, human resources, procurement, and call center positions in Hungary, the ministry said in a press release. Luring IBM, which already operates a major services center in Hungary, is a victory for the Hungarian Government, which has been working to bring high skill, added value jobs to the country at a time when many low skill-manufacturing jobs are moving east.
IBM had been among the big manufacturers to leave after it closed a hard disk unit in 2002 and laid off 3,700 workers. German business software firm SAP recently announced plans to locate a services center to Hungary while General Electric has been operating a major services division in Hungary for years. Keeping manufacturing jobs has proven difficult as rising wages and a persistently strong forint lowered Hungary's competitiveness versus its neighbors while the lack of available labor has also made it difficult to create large manufacturing capacity. The government's efforts to attract new foreign investment paid off in 2004, when foreign direct investments rose to 2.33 billion euros in the first nine months from 1.75 billion euros a year earlier.
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