How they control cost: 12-August-08
Sourav Mitra -
Tuesday, August 12, 2008 9:35 PM
Multinationals like Cisco, Motorola, General Electric, and Hewlett-Packard:
They are increasing R&D initiatives in India because:
a) The quality and experience of India's huge technical workforce is rising supplemented by an influx of returnees from the U.S., Britain, and Australia, many boasting years of managerial and R&D experience at Western corporations.
b) Salaries in India are still at the most about one-third of salaries in the U.S.
[Click here for full story at Businessweek.com]
Moving work to low cost regions = cost saving
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Boeing, airplane maker:
1. It is trying to convince its unions to accept defined-contribution pension plans in place of the traditional defined-benefit pension plans.
2. It will induct new staffers into a defined-contribution pension plan where Boeing's contribution will be limited, fixed, and predictable.
[Defined-contribution plans grow less, but free up company money (which Boeing wants to use for research and development or other purposes) because the company's financial responsibility is over after making the defined contribution
Defined-benefit plans require the company to set aside money for the plans whenever an investment, in the stock market or elsewhere, comes up short. This adds uncertainty to a company's budget because the company's responsibility is not over until employees receive their defined benefit. If the value of investments falls below the defined benefit, the company has to make good the difference.]
[Click here for full story at Businessweek.com]
Freeing funds from pension plans = cost savings