IBM expected to cut 6,000 to 8,000 positions, analyst says

Bloomberg NewsJune 12, 2013 

— IBM began cutting U.S. jobs Wednesday as part of a plan announced in April to spend $1 billion globally to trim its workforce, according to a person familiar with the move.

The reduction targets employees with a range of seniority, from rank-and-file workers to executives, said the person, who asked not to be named because the information is private. Some U.S. employees began to receive notifications of the cuts Tuesday night, according to Lee Conrad, a coordinator for Alliance@IBM, which has been trying to unionize IBM workers for years.

IBM, the world’s largest provider of computer services, announced the job-cutting effort after releasing disappointing first-quarter results in April. The Armonk, N.Y.-based company posted profit of $3 a share in the period, missing the $3.05 predicted by analysts. It was the first earnings shortfall since 2005, according to data compiled by Bloomberg. IBM said at the time that the job reduction would be concentrated overseas and mostly complete by the end of June.

The company is probably cutting 6,000 to 8,000 jobs globally, based on the $1 billion cost figure, said Laurence Balter, an analyst at Oracle Investment Research in Fox Island, Wash. That would represent less than 2 percent of IBM’s total workforce of 434,246 as of Dec. 31.

Several anonymous posts on the Alliance@IBM website Wednesday reported that jobs were being cut at IBM’s Research Triangle Park campus. Alliance@IBM serves as an unofficial clearinghouse for layoffs at the company.

IBM has thousands of workers in RTP but hasn’t specified how many for years.

“Change is constant in the technology industry and transformation is an essential feature of our business model,” IBM said Wednesday in a statement, without giving specifics on the job cuts. “Consequently, some level of workforce remix is a constant requirement for our business. Given the competitive nature of our industry, we do not publicly discuss the details of staffing plans.”

The $1 billion plan represents an increase over IBM’s job- cut efforts in recent years. The company spent $803 million on workforce restructuring in 2012, up from $440 million in 2011.

IBM also has been cutting hours of its contract employees. CDI Corp., a Philadelphia-based provider of staffing and outsourcing services, told its staff working for IBM to limit their hours in May, according to a memo obtained by Bloomberg. IBM at the time said that the company relies on contractors to manage labor costs on information-technology projects for clients.

Staff writer David Ranii contributed.

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