SAN FRANCISCO — IBM began its first round of United States layoffs Thursday as part of a "global rebalancing" act that could save about $1 billion in costs. The restructuring process could see as many as 15,000 jobs being cut globally, including India, Brazil, and the European region.
Charles King, principal analyst at Pund-IT, told EE Times:
The company has been undergoing a pretty elemental shift in its businesses over the last five to 10 years. IBM was mainly a hardware provider with a lot of attached services, has become a software provider with associated hardware. As the popularity of platforms waxes and wanes, they let workers go in divisions that aren't as profitable as they used to be and hire new positions they believe will be more successful.
Poor fourth quarter numbers, a 26% slump in hardware revenue, and various divestments have fueled layoffs. According to Alliance@IBM, an IBM employee organization, an unknown number of layoffs have occurred in Massachusetts, New York, Iowa, Missouri, Oklahoma, North Carolina, Minnesota, Arizona, and Vermont.
Layoffs have already occurred in Bangalore, India, where unofficial estimates show 1,000 jobs lost. No official numbers were immediately available on IBM's US employees. King said:
When a product division like [IBM's low-end server business] is sold off, what you'll see is firings in the marketing and sales divisions; the business unit is slowing down and getting ready to be owned by someone else. And a lot of times, the people below managerial level are often the ones that feel the pain first.
Alliance@IBM reported 10 to 15 jobs lost in Endicott, N.Y., while the Burlington Free Press reported that downsizing in Essex Junction, V.T. is expected to be about 140 jobs -- about one third the size of last year's 419-person cutback. The Poughkeepsie Journal noted at least three local jobs had been cut from the Systems and Technology Group, which works on development and manufacturing of mainframes and other large computers.
"The company, in a departure from past practice, has even left out some pages from its packages given to employees that let a person figure out the size of the downsize in a given business unit," the Journal continued.
IBM officials did not return calls for comment.
"This magnitude of layoffs is something we've seen over and over again at other IT vendors. HP in particular has gone through some pretty devastating layoffs," King said, adding that he does not think layoffs will have much effect on IBM's market status. "I think, unfortunately, this is the kind of strategic headcount reduction that happens very often as technologies come and go and vendors try to respond to changes in the market."
— Jessica Lipsky, Associate Editor, EE Times