IBM has confirmed that a round of global layoffs is underway, but is refusing to give figures on how many jobs are being cut.
According to Alliance@IBM, a Web site created by the Communications Workers of America union, which is trying to organize IBM workers, the software group appears to be bearing the brunt of the cuts, with 1,419 cuts reported, along with another 1,499 jobs lost in sales and distribution, mainly in the |US.
The Alliance@IBM Web site has been buzzing with job-cut rumours since the beginning of the year.
IBM has more than 386,000 employees worldwide and if rumours of 16,000 jobs to go are accurate, then, it would equal roughly a four per cent reduction in headcount.
Lee Conrad , a former IBM employee who now is national coordinator of the Alliance@IBM, said the he expected more cuts in the coming weeks.
Unlike Microsoft, Sun and other technology vendors that have announced layoffs recently, IBM is being reticent about describing its workforce actions and the reasons for them. "We are not going to discuss specific numbers or locations," IBM spokesman Doug Shelton, adding that company officials expect some of the affected workers to find other jobs within IBM and are "helping them with that effort."
Shelton also avoided the word layoffs and described the cuts as the result of an ongoing workforce-skills evaluation process. "IBM continuously evaluates its mix of skills and resources throughout the year, and makes changes as needed," he said. "The nature of our business is such that we must constantly assess employee skills and resources and at any given time give IBM the flexibility to match the current and future needs of our clients."
Last week IBM topped expectations by reporting a 12% profits increase for last year's fourth quarter. IBM reported a 6% year-over-year decline in revenue, to $27 billion in revenue, although that was caused in part by the strengthening of the dollar against other currencies.
Despite the generally upbeat earnings report, Andrew Bartels , an analyst at Forrester Research Inc., said there were some dark clouds in it that may be prompting IBM to take action to cut expenses.
For instance, revenue from IBM's hardware business was down 20% in the fourth quarter, a decline that reflects the worldwide economic slowdown , Bartels said. The stronger dollar is also hurting revenue overseas, he pointed out.
Last year, IBM and other IT vendors "were too optimistic about the economic and tech environment," Bartels said. But that has changed, he added. Vendors now "are very worried about the recession being longer and deeper [than expected], and causing CIOs to cut back even further," he said. "So you're starting to see vendors anticipate weaker growth and demand."
Bartels also speculated that IBM could be positioning itself to make an acquisition, and he pointed to offshore outsourcing vendor Satyam Computer Services Ltd. as possible target. India-based Satyam firm has been rocked by an accounting scandal after its now-former chairman disclosed earlier this month that the company had substantially misreported its earnings for several years.