

The massive restructuring effort that IBM Corp. insiders warned about a few weeks now appears to be underway. Lee Conrad, the head of an independent union serving the company’s U.S. workforce, first sounded the alarms earlier this week after he started receiving emails from a large number of employees claiming to have been given their termination notices. The cuts are broader reaching than previously believed.
Conrad told the press that he has been contacted not only by workers at IBM’s professional services arm, which was expected to take the brunt of the downsizing, but also its software and public cloud businesses. Some of the reports came from as far as the U.K. and France, with Conrad anticipating that even more international locations will be hit next week. However, the wide distribution of the layoffs is contrasted by a separate leak that surfaced yesterday and seems to suggest the number of employees set to be dismissed may actually be smaller than estimated.
An anonymous insider revealed to CRN that the percentage of IBM’s roughly 370,000-strong workforce due to be laid off measures in the “low single digits”, which he or she believes to mean around 10,000 employees. The vacated positions will either be eliminated as the company works to downsize its loss-making professional services arm or moved to countries such as China, India and Brazil where the cost of labor is cheaper than in the West. At the same time, Big Blue is also shifting employees to growth businesses like the much-touted Watson division that chief executive Virginia Rometty hopes will offset the declines in its other divisions.
For the time being, however, IBM’s revenue is still on a downward trend, which means more layoffs will likely be announced as the year progresses. That’s a disheartening prospect for the employees who’ve made it this far, especially in view of the company’s controversial recent decision to slash severance pay to just one month’s salary. Workers at other traditional enterprise vendors like EMC Corp. are also facing uncertainty as increased competition from the startup ecosystem and unfavorable conditions in the global economy start to take their toll.
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