IBM Cuts Internet Reimbursement For Home Workers

In its latest cost-cutting move, IBM plans to eliminate a program under which employees who work from a home office are allowed to claim Internet access as a business expense and obtain reimbursement from the company.

"IBM is updating its home expense policy and is eliminating payment of employee expenses for home Internet access services worldwide," the company said in an internal note to employees, a copy of which was obtained by InformationWeek.

The new rules go into effect May 1.

IBM said the expiring policy was formulated in the 1990s, when home Internet was not so ubiquitous.

"Today Internet access has become pervasive around the world and in-home Internet contracts have become commonplace along with cable and other telephony services," IBM said in the note, dated March 30. It added that it "remains fully committed to mobility and flexible work arrangements."

IBM officials declined to comment, but the move is likely a cost-cutting measure -- and it could mean big savings for the company. Of its 115,000 U.S. workers, about 46,000 are based at what IBM calls "alternative workplaces," a definition that includes home offices. Assuming each worker pays about $30 per month for a broadband connection, IBM stands to save up to $16 million annually from the move in the United States alone.

It could save even more as the policy also is being applied to IBM's international operations.

The risk, however, is that if IBM eliminates too many perks its recruiting efforts could suffer. A spokesman for rival Microsoft said the company reimburses some employees for home Internet expenses on a case-by-case basis. HP officials declined to comment.

IBM, which saw sales decline more than 6% in the fourth quarter, is looking to reduce expenses amid the recession. Last week, it handed pink slips to about 5,000 U.S. employees, according to company documents and labor sources. Earlier this year, it cut about 4,000 workers from its American operations.

IBM's first-quarter results, which will be announced on April 20, will be closely watched for signs of further revenue slippage given the company's status as a tech industry bellwether.

IBM shares were up 1.83% to $99.36 in opening trading Thursday.