Losing Appeal
The Korean offices of foreign IT companies are losing their appeal to their employees and job seekers alike, as the IT industry of the country is in the doldrums. The companies are focusing more and more on their branches in China and other Asian countries while curtailing the power and the role of the offices in Korea compared to the early 2000s. In addition, the companies have reduced the staff in Korea to add to the remaining labor intensity.
On average, the Korean offices account for 2 percent of the companies’ sales. The problem is that their profitability in Korea is on the decline. According to market research firm IDC, Korean companies’ investments in information technology had increased at an annual average of 5 percent before 2010, but the percentage dropped to 3 percent or so in 2010, and to 0.5 percent in 2013, whereas it has remained at over 10 percent in each of China, Vietnam, and Indonesia.
IBM Korea’s mainframe business has dwindled since 2010 as well, and its annual sales fell from more than 1.2 trillion won (US$1.0 billion) to 1.05 trillion won (US$1.3 billion) between 2010 and last year, during which its net profits more than halved to 47.8 billion won (US$43.1 million). Still, the amount of the dividends that it paid to the headquarters continued to increase during the period to reach 117.2 billion won (US$105.8 million) last year, and more than 500 employees left the company during the course.
HP Korea was subject to layoffs in 2012 and 2014, and the number of its employees has declined from 1,200 to 900 or so. The UNIX business unit has been absorbed by the x86 server business unit due to its poor business performance, and the printing and enterprise business units are slated to be separated from each other in the second half of this year, which is likely to entail another layoff.