IBM: Layoffs Are Coming, But Nowhere Close To 100,000
IBM CEO Ginni Rometty
IBM is debunking rumors that its about to lay off 100,000 employees, or over a quarter of its workforce, as “ridiculous.” But it is confirming that cuts are coming.
The layoff report came from Robert Cringely, a blogger that follows IBM closely.
“This rumor is ridiculous, and off by a factor of more than 10,” IBM’s director of corporate communications Doug Shelton told WRAL Techwire.
Doing the math on that, that means that closer to 10,000 jobs will be cut.
Shelton also points out that IBM is hiring, trying to add 15,000 people with new skills as it shifts its focus away from old-school enterprise tech towards the hot up-and-coming areas like cloud computing, big data and security.
Last week, when IBM reported 2014 earnings and gave guidance for 2015, CFO Martin Schroeter confirmed another round of cuts for 2015, but said they would be smaller than last year’s.
“I expect less spending in workforce rebalancing” in the coming year than in 2014,” he told analysts on the quarterly conference call.
In the fourth quarter, the company spent about $580 million in layoffs, as part of the $1 billion it warned it would spend on pink slips in 2014. It spent about $1 billion on layoffs in 2013, too.
Analysts had estimated that the billion added up to about 13,000 people.
An IBM spokesperson confirmed that vague number, telling the Wall Street Journal: “… IBM has already announced the company has just taken a $600 million charge for workforce rebalancing. This equates to several thousand people, a small fraction of what’s been reported.”
Even a spokesperson for Alliance@IBM, a union that seeks to represent IBM employees, was skeptical at the 100,000 layoff number.
This is an organization that watches IBM layoff happenings closely. In an email National Coordinator Lee Conrad told us, “The Alliance has no information that this is true and we are urging caution on reporting this number as fact. But as you all know, anything can happen at IBM anymore and this is the time of year that IBM cuts jobs.”
Cringely reported that the cuts will be do something internally called Project Chrome.
Now, we have heard several reports that IBM is about to undertake the biggest corporate reorg it’s ever done, and this could be what Cringely is hearing.
Instead of separate hardware and software groups, a structure that’s been in place for eons, IBM CEO Ginni Rometty is reportedly creating new groups built around new business areas: Research, Sales & Delivery; Systems; Cloud; Watson; Security; Commerce and Analytics. The company will continue to operate its Global Technology Services unit, as reported by The Channel Register,
We can’t confirm the lowdown on this reorg yet, but it certainly makes sense that she would do it.
Such a reorg could very well involve a quarter of IBM’s huge workforce, moving people around, but not firing them all.
IBM hasn’t publicly talked about the reorg yet. We had hoped to hear about it last week, when IBM announced earnings and offered new guidance for 2015. Not so.
Next up, investors are wondering if Rometty talk about the reorg at an investors meeting in February.
IBM hasn’t been very transparent about the number of jobs affected in its multi-year layoffs, not talking about headcount, only reporting how much money its cuts will cost the company. It also hasn’t yet updated its corporate fact sheet to reflect 2014 headcounts.
IBM says that at the end of 2013, it had 431,212 employees, which still makes it a huge company.
It has since trimmed employees through voluntary leaves and by selling off several business units, in addition to layoffs. Even so, a layoff of 10,000 would not be a substantial percentage.
Still, many IBM employees are nervous, they write on the Alliance@IBM forums, as are IBM contractors. Cuts are coming, even if they won’t be as astronomical as the rumor suggests.
We reached out to IBM for comment and will update when we hear back.
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