IBM may have just turned a profit for the first time in 22 straight quarters, but Big Blue clearly still has its eyes set on downsizing and reducing headcount. Approximately 30,000 workers are scheduled to be reassigned to other departments in 2018, with a further 10,000 losing their jobs through attrition, with no plans to replace them. And the overall count could be higher — there are 5,000 people listed that haven’t been put into new positions yet and might find themselves eliminated.
The move will cause significant ripples through IBM, with reassigned employees moving over to other roles, which may or may not qualify as long-term positions. There’s 5,000 people with nowhere to go at all, right now. And all of this comes after multiple rounds of layoffs at Big Blue in recent years, dampening employee morale and making it more difficult for the company to move forward, even if its short-term profits have finally improved. And despite owning PwC, which it bought in 2002, IBM brought in extremely expensive analysts from Bain Capital. Sources told The Register that didn’t play particularly well with IBM employees, who felt money spent on consultants could’ve gone to pay the salaries of employees targeted for firing.
IBM is pushing forward with a 20/20/60 ratio for its operations. This essentially means the company wants just 20 percent of its staff onshore, 20 percent in nearshore locations, and 60 percent offshore altogether. IBM already employs 122,000 people in India as part of a bid to reduce employee costs and improve the bottom line.
The cult of shareholder value may be partially responsible for this pivot. While IBM generated $92B in cash from 2012 to 2017, it returned 80 percent of that money to shareholders, leaving it with much less to invest than it would’ve otherwise had. Selling its foundries to GlobalFoundries was the logical consequence of dumping ones capital back into investor hands as opposed to using it for funding R&D, expansion, or simply paying workers more.
IBM refused to comment on the story, beyond offering the Register this: “As IBM has said in the past, we are focused on redeploying and reskilling our workforce globally, and IBM is substantially increasing its investment in professional development and technical training to focus on our strategic initiatives.”
If IBM has any plans to keep jobs or facilities in the US following the passage of a mammoth corporate tax cut at the end of December, it has yet to share them.
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