DailyTech - IBM Looks to Cut 5,000 More U.S. Jobs

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Hardware IBM Looks to Cut 5,000 More U.S. Jobs
Shane McGlaun (Blog) - March 26, 2009 11:00 AM

13 comment(s) - last by RagingDragon.. on Mar 27 at 9:10 PM

New round of U.S. layoffs coming from IBM

The poor global economy continues to impact the IT industry as more and more of the largest companies in the industry resort to layoffs. Among the big companies shedding employees is IBM and several others.

Sources close to IBM have said that the technology giant will be cutting an additional 5,000 jobs in the U.S. adding to the number of employees left jobless this year by big blue. The new round of job cuts will amount to roughly 4% of IBM's remaining U.S. workforce.

Reuters reports that its sources were not authorized to speak on the matter publicly and the sources claim that most of the cuts will come from IBM's global services business where it performs outsourcing and consulting services.

Analyst Charles King from Pund-IT told Reuters, "I think the company showed a lot more stability than most its competitors. At the same time, I think it's wise to remember that the economy remains unsettled. It makes sense for a company like IBM to take a close look at its employees and projects that are in process and so on, and play the safe game."

Despite the layoffs underway at IBM, the company is reported to be in purchase talks with Sun. Michael Dell has said that a merger between Sun and IBM would create significant opportunities for Dell in the server market as Sun users migrate to x86 based servers due to uncertainly on the future of Sun-based systems.

IBM is currently under scrutiny for its layoff practices in America. Allegations claim that IBM may be laying off employees in numbers small enough to skirt notification laws in America. DailyTech was contacted by one person claiming to be a former IBM employee recently laid off who alleges that shortly after being let go, recruiters began coming to him with contract job offerings from IBM for positions that were being cut in the layoffs.

IBM has previously reported a drop in Q4 revenue of 6.4% compared to the previous year. IBM still maintains that it can meet its earnings forecast of $9.20 per share for the year.

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The ironing is...

By Marlin1975 on 3/26/2009 11:25:49 AM , Rating: 3

quote:
most of the cuts will come from IBM's global services business where it performs outsourcing and consulting services.

So they are outsourcing the outsourcing people. OK.

But there are more layoffs to come. My SO works at IBM. Of course most of them will be small enough to not make the news and also get around several notification laws.
They are also cutting back on paying for some employee’s internet connection. Which at first may sound like a perk but between IBM cutting pay/not giving real raises for years and expecting a lot of those employees to work even in the middle of the night (think 2am)it is not.

RE: The ironing is...

By FITCamaro on 3/26/2009 12:03:52 PM , Rating: 5

I just hope they don't get rid of all the Telelogic people.

Have to wonder if they truly don't have work for those 5000 people or they just want to maintain their earnings per share. I really hate it when a company cuts jobs just to maintain their investors profits. Yes I know they have a duty to their shareholders but they also have a duty to their employees who make those profits possible. Giving the axe to someone who's productive just to maintain profit to me is just low. Of course the difference is I don't believe they should be controlled on whether or not they do it. Just doesn't mean I have to personally approve of the tactic.

In the end I think companies have far more to gain by keeping people employed as long as there's work to do. If every company did, then there's that many more people with the money to buy things from their companies and others. The economy is like nature, its a circle. Eventually you reach the point where no one has the money to buy anything and you run out of people you can get rid of. So you effectively, along with everyone else, put yourself out of business.

It doesn't help that our current administration is loving all this hardship since, in the words of Rahm Emanuel, "You never want to waste a good crisis."

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RE: The ironing is...

By Radnor on 3/26/2009 12:38:52 PM , Rating: 1

With every brand on a cutting trend, i as a consumer i just headed DIY on basically everything.

I know there are cuts that are needed. Some are just crazy. I know im extremist on this one. Firms are on a Ecology trend, and when they screw up they are pointed out.

But when they start slashing like madman's, nobody points them a find. IBM wasn't on my list, but it was just added.

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RE: The ironing is...

By Ananke on 3/26/2009 12:56:49 PM , Rating: 2

A crisis is a good oportunity to trim the HR expenses and maintain profit margins. The workload remains pritty much the same. Layoffs and salary cuts will continue at least two-three more years in the IT industry.

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RE: The ironing is...

By Radnor on 3/26/2009 1:33:07 PM , Rating: 2

I agree here with you. But this just become a trend or an excuse to lay-off everybody that wasn't "essential".

Read the HP letters that leaked for example.

My only point is, if we buy something for being "green", we should do the same for companies that just doesn't fire people for a trend or for a bad excuse.

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RE: The ironing is...

By tjr508 on 3/26/2009 7:13:57 PM , Rating: 2

Yes operating at a loss is a great idea. Look at GM for example. They have been doing it for years and look how good they're doing.

Since this is such a great idea, you should put your entire retirement into companies that are losing money.

On a reality note, IBM is a great company and knows how to produce earnings. I would trust them with my money.

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RE: The ironing is...

By Radnor on 3/26/2009 7:54:57 PM , Rating: 2

Again, daily tech posters vs unions ?

This is getting really old. GM is crumbling because they had not so good products for a long period of time.

IBM was a great company. Now it is a decent company. It seems now, like many other on this branch during this crisis, it is a horrible company to work on.

On the other end, putting your retirement money on companies seems kind of silly. You know when you die your money is kept here on earth, right? Or nobody told you?

IBM "still" knows how to produce earnings. But I as a IT worker and consumer it is one company i take off the list. Now if more like me (they exist, trust me) refuse to use their product, i want to see them producing money.

IBM and HP are both on my "no-no" list. There are a few more. For a matter of principle.

I forgot, you don't have that. How was the sub-prime burst for you?

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RE: The ironing is...

By RagingDragon on 3/27/2009 9:07:47 PM , Rating: 2

I agree in general - the extent to which publicly traded companies are driven by whims of stock market speculators aggravates me. Since speculators don't care about long term consequences (they'll dump the stock before the company suffers the consequences), this leads to short term decision making which tends to ruin companies in the long term. I think it's because most of the decision makers (executives, board members, and institutional investers who control most of the shares - i.e. mutual funds and pension funds) will be fired unless they maximize short term returns for their bosses. For the most part*, none of them are allowed to care about the long term welfare of the company, let alone the long term welfare of the employees.

Seems to me the privately traded companies have alot more freedom to plan for the long term, and generally act in ethical manner. On the other hand, this freedom can also allow them to behave even worse than publicly traded companies...

In this particular case, it could be true that IBM doesn't have work for these people. According to the article the layoffs are mostly from Global Services, and in the current economy it's quite likely IBM's customers are cancelling many projects outsourced to IBM, cutting back on consulting contracts which aren't absolutely essential, and maybe even switching from IBM to lower cost service providers (or better yet replacing $300/h IBM consultants with $50/h full time employees).

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RE: The ironing is...

By RagingDragon on 3/27/2009 9:10:11 PM , Rating: 2

* = obvious exceptions would companies where the executives, employees, and/or unions are the major shareholders.

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IBM moving jobs to India

By EglsFly on 3/26/2009 8:20:26 PM , Rating: 2

Saw this posted on tgdaily.com
http://www.tgdaily.com/content/view/41854/118/

quote:
Armonk (NY) - The Wall Street Journal reported yesterday that IBM will be moving "a large number" of US jobs in its business services divisions to new employees in India, thereby laying off the US workers.

RE: IBM moving jobs to India

By dsraa on 3/27/2009 1:58:21 PM , Rating: 2

This is exactly what I was about to link as well. As a person who works at an IBM Site, I think IBM loves to do this more than everyone thinks. Its ridiculous that THE ONLY REASON WHY IBM IS ABLE TO MAKE MONEY, AND PROFITS IS BECUASE OF THE CRAP THAT THEY PAY PEOPLE IN INDIA VERSUS A JOB IN THE USA! I am slowly watching all the IBM sites here in the Northeast trim its employees just enough every quarter for it to not hit the news. THANK GOD the local news found out and reported them this time. I even heard that our Couny legislature is looking into IBM's firing practices....I guess thats why Idiots Become Managers at IBM because its always ONLY about the damn money.

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Isn't IBM talking about buying Sun...

By GodisanAtheist on 3/26/2009 4:14:40 PM , Rating: 2

... for about $8 Billion dollars?

Now if these 5,000 employees are part of some totally unprofitable venture and cannot be retasked then cutting off the limb may be the best course of action. If it is, however, simply a question of value per share and SOMEONE had to be fired then shame on IBM.

IBM peace of junk

By usman on 3/27/2009 2:41:04 PM , Rating: 2

I used to work with IBM. They treat their employee as crap. So, i got off and found another job. I think we should start thinking one think for ourself, why we are buying those companies product who is not benefiting our own people.

think about it...