IBM planning jobs ‘bloodbath’

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27 January 2015 | 0

IBM is apparently planning the most “devastating” jobs cuts in US business history, reportedly up to 110,000 employees from a global workforce of 435,000, an unconfirmed report has suggested.

Even for the famously unsentimental tech industry, cuts of this size would be unprecedented, although it should be emphasised that IBM has yet to make any statement indicating such a cull is imminent. This is an unsourced claim, not fact.

Clearly, something is up because the journalist with the scoop, Robert X. Cringely (who coincidentally wrote one of the most famous introductions to the rise of the PC era tech industry, Accidental Empires, later a TV series) woudn’t be expected to indulge tittle-tattle. He does, however, have a history of criticising IBM management, including in his e-book, The Decline and Fall of IBM.

He also wrote a column for IDG title InfoWorld which in 1993 would have covered the last massive cuts IBM made, around 60,000, at the time a huge shock for an industry that had grown fat on the back of an unstoppable wave of personal computing.

According to a Cringely blog on Forbes, 26% is the percentage dialled-in by IBM’s management under a sacking “transformation” programme called Project Chrome. The effect on Irish jobs is impossible to gauge but the country will not be left unscathed by cuts on this scale.

Given that IBM has over 400,000 employees on its roster, English quickly runs out of understandable adjectives to describe that level of cull. ‘Swingeing’ doesn’t quite do its justice.

“Project Chrome is bad news, not good. Customers and employees alike should expect the worst,” said Cringely of the latest cuts.

“The USA will be hit hard, but so will other locations. IBM’s contractors can expect regular furloughs in 2015.”

One division that will be hit hard is IBM’s oldest surviving, mainframes, with storage another big casualty.

“This is a bit short-sighted and typical for IBM. They just announced the new Z13 mainframe and hope it will stimulate sales. Yet they will be cutting the very teams needed to help move customers from their old systems to the new Z13.”

According to Cringely, the cuts are an accounting solution to the firm’s recent and disappointing financial performance, which has among other things seen its stock drop rapidly after modest growth since the financial crisis.

“It will traumatise the corporation and put most accounts into immediate crisis. While survivors dig out from the devastation, IBM will change their managers and their job descriptions, concluded Cringely, ever the poet of technology’s cycle of feast and famine. IBM has been here before and it’s still standing.

At the time the 1993 cuts were seen as a disaster for the US but also a sign that the IBM model of selling technology was out of time. Another view is that many talented engineers were set free from their desks and suits and quickly hired by a range of Silicon Valley start-ups in networking and telecoms. The Internet is the way it is today partly because of that talent influx.

UPDATE:

IBM has released an official statement debunking Cringely’s story:

“IBM does not comment on rumors, even ridiculous or baseless ones.  If anyone had checked information readily available from our public earnings statements, or had simply asked us, they would know that IBM has already announced the company has just taken a $600 million charge for workforce rebalancing.  This equates to several thousand people, a mere fraction of what’s been reported.

“Last year, IBM hired 45,000 people, and the company currently has about 15,000 job openings around the world for new skills in growth areas such as cloud, analytics, security, and social and mobile technologies. This is evidence that IBM continues to remix its skills to match where we see the best opportunities in the marketplace.”

Computerworld and TechCentral Reporters

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