IBM Layoffs Begin in Workforce Rebalancing Effort

IBM begins layoffs as part of $1 billion restructuring as it focuses on cloud, analytics, big data, mobile and more.

As expected, IBM has begun the workforce rebalancing effort the company foreshadowed in January due to lackluster 2013 financial results.

Job cuts began this week in locations such as Rochester, Minn., and Burlington, Vt., to name a few. In January, IBM announced it would be taking a restructuring charge of $1 billion in the first quarter of 2014. That restructuring is now in full swing. Meanwhile, IBM has committed to focusing on higher-value initiatives, including cloud computing, big data and analytics, cognitive computing, mobile and security, among others.

Hit hard by shortfalls in hardware sales in the fourth quarter of 2014—IBM's Systems and Technology Group (STG) revenue declined 26 percent—the company announced that top executives would forgo their 2013 bonuses. Now, some sources say IBM's STG unit may lose up to one-quarter of its employees. IBM has not confirmed that, however.

"As reported in our recent earnings briefing, IBM continues to rebalance its workforce to meet the changing requirements of its clients, and to pioneer new, high-value segments of the IT industry," said IBM spokesman Doug Shelton in a statement. "To that end, IBM is positioning itself to lead in areas such as cloud, analytics and cognitive computing, and investing in these priority areas."

Shelton added, "At any given time, IBM has more than 3,000 job openings in these and other growth areas in the U.S."

Lee Conrad, national coordinator for the Alliance@IBM, a Communications Workers of America group fighting for union rights for IBM workers, said that on Feb. 27 the union's Website was running slow due to the massive amount of hits being received from workers being laid off or others interested in the workforce rebalancing.

Later in the day, Conrad said, "Our Website is running a little better and reports are coming in. We will update the site with locations of job cuts. But there is a disturbing development. In the past, IBM resource action documents that are given to employees when they are terminated would show the business unit affected and the OWBPA [Older Workers Benefit Protection Act] report, which lists age, title and number of employees selected for the job cut. This is how we validated and counted the numbers that we gave you in past job cuts. That information is missing in the current resource action documents. IBM clearly does not want us, you or other employees to know the depth and scope of today's cuts."

Despite the cuts, IBM is investing heavily in new areas as it also divests itself of businesses it deems are part of its past. Last month, IBM announced a $1 billion investment in its new Watson Group, a business unit dedicated solely to the development and commercialization of cloud-delivered cognitive innovations. The move signified a strategic shift by IBM to accelerate into the marketplace a new class of software, services and applications that think, improve by learning, and discover answers and insights to complex questions from massive amounts of disparate data, the company said.