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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.
IBM Layoffs Begin in Workforce Rebalancing Effort
Moreover, IBM said it would invest more than $1 billion into the Watson Group, focusing on development and research and bringing cloud-delivered cognitive applications and services to market. This will include the establishment of a $100 million venture investment fund to support IBM’s recently launched ecosystem of startups and businesses that are building a new class of cognitive apps powered by Watson, in the IBM Watson Developers Cloud.
Just this week IBM announced the Watson Mobile Developers Challenge. Announced Feb. 26 at the Mobile World Congress (MWC) in Barcelona, Spain, the IBM Watson Mobile Developer Challenge encourages developers globally to create mobile consumer and business apps powered by Watson.
Also last month, IBM pledged to commit $1.2 billion to significantly expand its global cloud footprint, beefing up its SoftLayer infrastructure and other components. Big Blue said the investment includes a network of cloud centers designed to bring clients greater flexibility, transparency and control over how they manage their data, run their business and deploy their IT operations locally in the cloud.
In 2014, IBM plans to deliver cloud services from 40 data centers worldwide in 13 countries and five continents globally, including North America, South America, Europe, Asia and Australia. Among the newest IBM cloud centers to launch are Washington, D.C., Hong Kong, London, Toronto, Japan, India, China, Canada, Mexico and Dallas.
To top things off, IBM in January announced it was selling its x86 business to Lenovo for $2.3 billion. In this deal, Lenovo will get IBM’s System x systems, as well as its BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking and maintenance operations.
Meanwhile, IBM will continue to build out its Windows and Linux software offerings for the x86 server platform, and for a while, will provide maintenance delivery on the systems. Lenovo will take over customer services and maintenance operations, the companies said. About 7,500 IBM employees worldwide—including at such sites as Raleigh, N.C.; Shanghai and Shenzhen in China; and Taipei, Taiwan—will be offered employment by Lenovo.
Workforce rebalancing is nothing new to IBM. Last year the company took a $1 billion restructuring charge and parted ways with up to 8,000 employees globally.
Earlier this month, the Alliance@IBM released figures on job cuts abroad, including angry reports from IBM India workers that began flooding the union’s Website, though no numbers were released for India. Yet the alliance reported losses of 1,500 positions in Brazil, 600 in Argentina, 480 in France and 430 in Italy.
In addition to Vermont and Minnesota, Alliance@IBM also reports IBM job cuts in various New York locations, Littleton, Mass.; Dubuque, Iowa; Columbia, Mo.; Tulsa, Okla.; Research Triangle Park, N.C.; and Tucson, Ariz.
However, according to reports, IBM has committed to bring 500 jobs to a new, 100,000-square-foot, state-owned computer information technology center in Buffalo, N.Y., to train future and current industry workers.