As IBM goes about its efforts to transform itself to focus on strategic imperatives such as cloud computing, analytics and cognitive technology, the company also is quietly getting rid of an increasing number of employees.
According to various reports, most prominently, the Watching IBM page on Facebook, IBM has let thousands of employees go this year—primarily in what the company calls “resource actions,” or RAs—in March and again in May.
Reports on the number of employees to be cut vary, with some saying up to 14,000 and others saying 18,000 to 25,000 jobs are on the line. And some reports indicate that as much as one-third of IBM’s U.S. workforce could be laid off.
Many enterprises continually cycle current employees out and new employees in, as part of adapting to market needs and changing skills, said Charles King, principal analyst at Pund-IT, and a close watcher of IBM.
“The bigger the company, the larger number of workers who could be affected,” King said. “But eliminating one-third of the jobs in a company like IBM—which currently has about 378,000 employees—would render huge swaths of the company essentially ineffective and unmanageable.”
IBM is keeping mum on the number of job cuts there will be this year. However, in a statement, the company said: “IBM is aggressively transforming its business to lead in a new era of cognitive and cloud computing. To this end, IBM currently has more than 25,000 open positions, many in these key skills areas. If we meet our hiring targets, we expect our employee numbers to be roughly the same at year-end as they were in 2015.”
That is in keeping with the information shared by Martin Schroeter, IBM’s CFO, during the company’s most recent earnings call in April, where he discussed IBM’s first quarter 2016 financial results. That quarter marked the 16th straight quarter that IBM’s revenue has dipped as it continues to make its transformation.
“As we transform our business and move into new areas, we need to transform our workforce—not only the types of skills, but how we operate,” Schroeter said during the earnings call. “This quarter we took significant actions to transform our workforce and shift our skills base to new areas, and to improve our structure primarily outside the U.S.”
This resulted in a pre-tax charge of just under $1.5 billion, Schroeter said.
He also indicated that some of the charge was used to take care of areas where IBM has been dealing with “underutilization,” but the vast majority is to shift and rebalance skills.
Cognitive computing, a new field of focus for IBM, requires new and different skills, particularly areas such as Watson Health and Watson Internet of Things. Over the last year, IBM added more than 6,000 resources in Watson Health, and added more than 1,000 security experts.
“These are specialized skills in highly competitive areas,” Schroeter said. “So this is not about reducing our capacity; this is about transforming our workforce. We started the year with just under 380,000 people.”
Schroeter reiterated that although IBM has “people leaving the business,” the company also is hiring aggressively and has tens of thousands of open positions such that its employee base could be the same at the end of this year as it was at the end of 2015.
IBM Layoffs Continue as Transformation Rages On
“Our hiring will be aligned to where we see demand—by skill area, and by geography,” he said. “As we look at the resource actions, about 90 percent of the spending is outside the U.S.”
Indeed, Lee Conrad, who manages the Watching IBM group on Facebook, told eWEEK more and more IBM jobs are moving offshore.
“The lights are turning off in IBM United States,” he said.
“IBM is quickly becoming ‘India Business Machines,'” wrote one former IBMer who posted on the Watching IBM page.
Yet, some see the expansion of IBM’s global operations as the cost of doing business in the modern age.
“Like many other U.S.-based tech vendors, IBM has taken advantage of lower wages in overseas markets, including China, Korea and Taiwan,” King said. “But the company also does over half of its business in overseas markets, so hiring workers to support those efforts doesn’t qualify as ‘moving jobs’ to my way of thinking.”
That does nothing to quell the disappointment of the many who have been let go.
Requesting anonymity, posters to the Watching IBM page challenged IBM’s claim of 25,000 open jobs.
“I keep seeing the articles written that IBM is saying that they have 20,000 open positions and employees claim that there are only 8,000 listed (I can verify this: there are less than 8,300 jobs listed on the internal site),” said one poster.
That poster and others who were let go from one position at IBM said they tried to apply for some of the listed openings, only to be told the positions had been canceled.
“I was always ‘coached’ not to consider an RA’d employee for any opening I had,” wrote a Watching IBM poster who said he was a manager at IBM for 10 years. “They would not be approved for transfer no matter how strong a candidate or their skills.”
Meanwhile, another issue bothering recently laid off former IBMers is the limitations on severance packages. According to Watching IBM, IBM’s previous severance policy was capped at six months of pay and benefits; it is now just one month.
“Got the call from my manager on the May 19th,” wrote a poster to the web page. “Same deal as everyone else (90 days and 1 month severance),” said the 17-year former IBM employee who claimed to have a solid record of achievement with the company.
“I cannot express adequately my extreme disappointment in how far ‘down’ this company has gone—the corporate greed and outright depriving good people who gave years to IBM of deserved benefits and a decent severance package is simply unfathomable,” the same individual said.
Moreover, following the first quarter earnings, Schroeter said IBM not only has to transform its business, but also has to transform the way it works.
“As we transform our workforce, we’re changing how we’re working—more agile, more collaboratively—and this requires a different work environment,” he said.
So in the first quarter IBM took a real estate charge of more than $300 million, “as we change the way we work—moving to agile with less space required,” Schroeter added.
In that regard, IBM last month said it would be closing its Somers, N.Y., campus, which housed about 2,000 systems and software division employees, and moving those workers to an IBM facility in North Castle, N.Y.