IBM launches voluntary redundancy scheme in latest job cuts

IBM launches voluntary redundancy scheme in latest job cuts

The cutbacks, termed 'Resource Actions' by IBM, are likely to hit roles in Europe and specific departments worldwide the hardest.

Published on 4th March 2024

IBM is asking staff who want to take voluntary redundancy to raise their hand as it embarks on a new round of global job cuts, though roles in Europe and within a handful of departments are expected to shoulder the brunt.

The Resource Action, as Big Blue likes to euphemistically refer to layoffs, shouldn’t be a massive surprise to anyone with more than a passing interest in IBM as it was signaled last month in a Q4 earnings call.

Insiders told us this latest process is not considered to be financial but “transformative,” although IBM was quite clear in January when CFO James Kavanaugh discussed achieving “$3 billion annual run rate in savings by the end of 2024.” This is a third bigger than the initial ambition.

It is understood that 80 percent of the reduction target is aimed at Enterprise Operations & Support (EO&S) and Q2C missions, Finance & Operations (including Procurement, CIO, HR, Marketing & Comms and Global Real Estate).

The European Works Council, one IBMer told us, has informed staff that circa 50 percent of IBM’s reduction goal will impact staffing levels across the European continent.

Meetings between IBM and EWC began this month, with the EWC asked to comment.

As if often the preferred route, IBM is seeking employees that are happy to take voluntary redundancy, rather than ditching someone that doesn’t want to leave.

The sources we spoke to did not reveal the total population in scope for redundancies or the numbers of volunteers being sought. IBM did not confirm the numbers either.

Slovakia, we’re told, is to feel the tightest squeeze with around a third of IBM’s cuts in Europe landing on its International (shared services) Center in Bratislava; the Center in Hungary that supports EO&S/ Q2C, as well as the Finance function in Bulgaria are also going to absorb what our sources described as the most dramatic staff reductions.

We asked IBM to comment on the points raised above, and a spokesperson sent us a statement, insisting this is not a cost saving initiative.

“In 4Q earnings last month, IBM disclosed a workforce rebalancing charge that would represent a very low single digit percentage of IBM’s global workforce, and we expect to exit 2024 at roughly the same level of employment as we entered with. This rebalancing is driven by increases in productivity and our continued push to align our workforce with the skills most in demand among our clients, especially areas such as AI and hybrid cloud.”

IBM reported four percent revenue growth to $17.4 billion for calendar Q4 and operating profit of $3.75 billion. IBM had planned run rate cost savings of $2 billion for the end of this year but stretched that target to $3 billion.

Any financial savings will be used to free up money to invest in technical and industry skills, IBM said.


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