Strategic CIO // IT Strategy
01:03 PM

IBM Layoffs Include Wide Ranging U.S. Job Cuts

Internal documents show Big Blue is eliminating more than a thousand positions in its Global Business Services unit alone.

It's not a good day to be an IT specialist in IBM's Global Business Services unit.

More than 600 workers carrying that title were given walking papers Thursday as part of a sweeping reorganization under which Big Blue is eliminating as many as 5,000 positions in the United States, according to sources and internal IBM documents.

"In an effort to rebalance skills, eliminate redundancies, and deliver greater economic efficiencies, IBM Global Business Services is announcing a resource action affecting U.S. employees in Application Services," says an IBM document dated March 26 that has been obtained by InformationWeek.

The cuts in GBS Application Services alone number 1,674, according to the documents, which show that the redundancies are wide ranging and affect IBM locations across the country.

In addition to the more than 600 IT specialists impacted by the restructuring, the layoffs cover a broad swath of other positions -- from 53 partners in the Security and Privacy Services group to one 58-year-old "teleservices professional." Other jobs axed include those of dozens of IT architects, sales specialists, managing consultants, systems analysts, and financial analysts. Not included in what IBM, which cut more than 4,000 jobs earlier this year, euphemistically calls a "resource action" are the unit's 10 VPs.

IBM isn't the only tech company paring its workforce amid the economic downturn. Agilent Technologies said Thursday that it plans to lay off 2,700 staffers. Microsoft earlier this year announced 5,000 layoffs.

An IBM employee group, Alliance@IBM, claims many of the jobs are being eliminated so that the company can move the positions to low-cost locations like India, where programmers earn less than half the annual salaries of their U.S. counterparts. IBM officials have not returned calls seeking comment.

IBM has been reducing its U.S. headcount for the past several years while expanding its presence in emerging markets. IBM employed 115,000 workers in the United States in 2008, down from 127,000 in 2006. The company now employs more than 70,000 workers in India.

Beyond the Subcontinent, Big Blue is building its footprint in Brazil, China, Eastern Europe, and other countries and regions where salaries are low compared to U.S. standards and where growth prospects exceed those of the sluggish North American market.

IBM believes its willingness to place jobs in foreign markets gives it an edge when it comes to bidding for domestic work in those areas. For instance, the company in late 2007 snagged a $600 million contract to help Vodafone roll out wireless services in India.

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