informa
/
News

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.
The upshot: IBM has been riding out the global recession better than most of its peers and it continues to pay a healthy dividend to investors.

In the most recent fourth quarter, IBM's sales fell 6.4% year over year to $27 billion. But earnings per share rose 17% to $3.28 and net income jumped 12% to $4.43 billion. The earnings beat Wall Street expectations.

Cash-strapped corporate IT departments also stand to benefit if IBM's offshoring drive helps to keep a lid on prices for tech services.

IBM also may be looking to trim its sails in advance of some significant corporate activity. The Wall Street Journal last week reported that the company is in talks to acquire Sun Microsystems for about $6.5 billion. IBM also may be interested in acquiring on-the-block Indian outsourcer Satyam, which is seeking to emerge from an accounting scandal that has seen its chairman and several executives jailed.

But despite some sound business reasons for offshoring, the job cuts come at a particularly sensitive time. IBM has been one of the most active tech vendors in terms of efforts to secure work funded by President Obama's multibillion-dollar stimulus package -- which largely aims to improve the nation's infrastructure while creating thousands of new jobs.

"Companies will look to hire more software developers, IT consultants, and managers who possess both the technology and business skills necessary to support these investments" as a result of the American Recovery and Reinvestment Act of 2009, IBM said as recently as two weeks ago.

Some IBM workers believe any jobs created by the stimulus package and other government programs should remain in the United States.

"Do research on the state and federal tax breaks IBM has gotten or is getting. Many if not most of these tax breaks were deals where IBM promised to bring in jobs," one [email protected] member wrote in a post on the group's online forum.

According to IBM's documents, laid-off workers will receive one week of pay for each six months worked, to a maximum of 26 weeks. They also will be eligible for some health care and retraining benefits. The catch: To receive severance benefits, the workers must promise not to sue IBM or solicit current IBM employees or customers if they end up at a competitor.

Axed employees should not hold out hopes of getting recalled. According to one IBM document, "This layoff is permanent."


Each year, InformationWeek honors the nation's 500 most innovative users of business technology. Companies with $250 million or more in revenue are invited to apply for the 2009 InformationWeek 500 before May 1.

Editor's Choice
Richard Pallardy, Freelance Writer
Salvatore Salamone, Managing Editor, Network Computing
Kathleen O’Reilly, Leader, Accenture Strategy
Cassandra Mooshian, Senior Analyst, AI & Intelligent Automation, Omdia