IBM to begin operations at MSU later this spring, create 1,500 jobs

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Although information technology jobs have become synonymous with outsourcing, MSU and IBM reversed that trend two weeks ago when the computer company announced an agreement to establish a programming center on campus.

IBM expects to begin operations on campus later this spring and create 1,500 jobs over the next five years. The company will work with MSU to offer graduates and current students job and internship opportunities.

MSU economics professor Charles Ballard said while many jobs continue to move out of the country, outsourcing isn’t always the best practice.

“The question is not where can you find cheapest labor; the question is where can you find labor that can do what you need done cheaply and well,” he said. “There’s still plenty of opportunities on this side of the ocean for keeping at the top of the value chain.”

Part of IBM’s decision to come to East Lansing was announced at last week’s City Council meeting. The council approved a personal property tax exemption for the company when it moves into its new home on Crescent Road.

The tax exemption helps lighten IBM’s business costs for partnering with MSU, and also played a role in luring the business consulting company to East Lansing, said Denyse Ferguson, interim president and chief executive officer for the Lansing Economic Area Partnership.

The abatement is valid for at least five years, but could be lengthened up to 12.

It covers equipment and furniture, but not building and land. The amount of money IBM will save depends on IBM’s investment levels and number of employees, said Tim Dempsey, community and economic development administrator for East Lansing.

Current projections show that IBM is expected to invest $1,500 per employee, and is expected to have 100 employees for the first year.

The personal property tax exemption marks the second time East Lansing has created such a measure to bring a high tech business model industry to the city. Working Bugs LLC received a similar exemption early last year.

“We’re looking at the continued shift away from a manufacturing economy to a knowledge-based economy, which is going to lead to job creation in the future,” Dempsey said.

Michigan’s information technology industry should reap the benefits of IBM’s partnership with MSU in terms of recruiting experience, said Chris Knapp, executive director of the Capital Area IT Council.

“IBM’s announcement helps to increase recognition of our IT industry,” Knapp said. “It’s a big name and is a tremendous boost to the IT industry.”

Satish Udpa, dean of MSU’s College of Engineering, said the agreement between Big Blue and MSU resulted after the IT company met with a number of other groups around the country before deciding on East Lansing.

“I’d like to think why they chose MSU or why they chose East Lansing is because this is an internationally focused university,” he said. “IBM is an international-focused company. I think there are similarities in the way we do business.”

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