IBM Layoffs Reach the Netherlands

By Darryl K. Taft  |  Posted 2016-07-07 Print this article Print
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An email leaked to a Facebook page that watches IBM indicates the tech behemoth plans to trim its staff in the Netherlands for the first time ever.

IBM this week informed its employees in the Netherlands that a layoff is coming and it will begin Sept. 1.

According to an email leaked to the "Watching IBM" page on Facebook, IBM will initiate what it calls a Workforce Rebalancing program in the Netherlands to remain competitive in the market.

News of a layoff at IBM is not shocking; it is viewed as part of the way the company operates in a competitive market in today's economy as the tech behemoth continues to transition its business to deliver higher value solutions. Indeed, in its first quarter earnings report, IBM said it would need to reduce headcount and layoffs, which had already begun, in the United States and other locations. Yet the wording of this leaked email sheds light on the harsh realities of IBM's transition and how it impacts employees.

"In today's world, those who do not keep reinventing themselves, fall behind," the email said. "The demand of the market for new skills and capabilities, is changing fast due to new technologies and changing business models. Our customers have a need for new insights, knowledge and capabilities, making the existing expertise redundant. That is why the optimization of our workforce is a permanent and ongoing part of our business model."

The email goes on to say that while in the past IBM has been able to keep its Netherlands workforce fit and trim through voluntary leave programs, "This time the number of places we need to rebalance is too large."

On Sept. 1, IBM Netherlands employees affected by the layoff will be informed by their manager. The author of the email acknowledges that it is a "tough message," particularly in light of this being the first involuntary reduction of headcount for IBM in the country.

"I do realize that by far the most important question now is whether you can keep your job," the email said. "We can't answer that question yet. All affected employees will be informed on September 1st about their notification and when their employment at IBM will end."

In response, IBM said the situation in the Netherlands is related to the cuts the company announced in the first quarter.

In a statement, IBM said: "The news from the Netherlands is part of the changes to the company we articulated during first-quarter earnings. At the time, we did state that we are transforming the company 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 IBM meets its hiring goals, we expect to end the year with the same number or more employees than at year-end 2015."

According to reports, IBM has let thousands of employees go this year, primarily during what the company calls "resource actions" in March and again in May.

Reports vary on the number of employees cut, 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.

Most 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 has been mum on the number of job cuts there have been this year. However, in a statement issued in May, IBM shared its outlook on ending this year with roughly the same number of employees that it had last year.

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.


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