IBM Europe cuts jobs due to strategy change

Trade

The firm, which employed 329,000 staff worldwide at the end of 2004,
last week revealed the job cuts, more than two-thirds of which will
occur in Germany, the UK, Italy and France. It had already transferred
an additional 10,000 employees to Lenovo when it acquired Big Blue’s PC
division in as part of a $1.25 billion deal completed recently.
Mark Loughridge, chief financial officer at IBM, said during a web cast
that the job cuts, which will be a mixture of voluntary and involuntary
redundancies, have been under examination since its first quarter
results came out last month.

“There is no longer a need for a pan-European management level. We are pushing more decision-making responsibility down through the management structure to client-facing teams. Changing our operating model enables us to make high-value offerings and overcome competitive threats,” he said.

But many channel players seemed unconcerned by the job cuts. Kevin
Drew, managing director of ISV Triangle, said: “This should be positive
for IBM’s UK channel partners and make IBM a more flexible machine to
deal with.”

Paddy Lawton, managing director of Digital Union, said: “To strip out
management layers and have tighter regional controls would be good for
partners. This could make it easier for us to work over broader
regions.”

Pretax charges, including redundancy allowances, will cost the firm up
to $1.7 billion and it said the “realignment” of its European
operations will also help to improve its speed of execution to better
meet the needs of end-users.

Ian Wesley, IBM research director at Ovum, said: “This won’t mean fewer
opportunities for channel partners. They shouldn’t be worried by the
announcement.”

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