IBM issued a company memo this week stating it would institute involuntary job cuts for the first time in the Netherlands, adopting a new and permanent workforce reduction strategy in the region. The effects could be far reaching.
Lee Conrad, a former IBM employee who oversees Watching IBM, a Facebook page that tracks Big Blue's workforce cuts, told InformationWeek the move may serve as a template for Big Blue to impose forced layoffs in regions where local labor laws have made it difficult to impose mandatory cuts. IBM Netherlands, for example, previously was only subject to voluntary job cuts, according to Conrad.
"In many of the European countries, the cuts historically have been voluntary. This is because of the existence of works councils and unions inside IBM. Labor laws are also more favorable to workers," said Conrad, who previously oversaw the now defunct union organizing effort called [email protected]
He added IBM's effort to spread this practice across Europe and other regions will likely increase.
"IBM wants to rid itself of more employees than will volunteer to leave," Conrad said in our interview. "IBM also wants to terminate workers in selective areas and not rely on volunteers. IBM is also shedding business units in countries like Germany and Italy and either selling them to other companies or moving them to low-cost countries like India or countries in Eastern Europe."
An IBM spokesman, while not specifically addressing the job cuts in the Netherlands, told InformationWeek, "As reported earlier this year, IBM is transforming its business to lead in a new era of cognitive and cloud computing. To this end, IBM currently has more than 25,000 open positions, many in these key skills areas. If IBM meets its hiring goals, we expect to end the year with around the same number of employees [as] at (year-end) 2015."
IBM had 377,757 employees at the end of 2015, according to its annual filing with the Securities and Exchange Commission. That is down from the 379,592 employees it had in 2014, according to its SEC filing.
A copy of the IBM Netherlands' layoff memo was posted on the Watching IBM Facebook page and shared with the IBTimes UK. The IBM memo stated:
In today's world, those who do not keep reinventing themselves, fall behind. The demand of the market for new skills and capabilities, is changing fast due to new technologies and changing business models. Our customers have a need for new insights, knowledge and capabilities, making the existing expertise redundant. That is why the optimization of our workforce is a permanent and ongoing part of our business model.
In essence it means rebalancing the number of employees currently working for IBM in The Netherlands and this through an involuntary program. And that is unique in the history of IBM Nederland.
In the past IBM implemented successfully voluntary leave programs. This time the number of places we need to rebalance is too large. The impact of another voluntary leave program will weigh heavily on the organization. We would need to address too many of our co-workers to realize the reduction we envision. An involuntary program allows us to implement a very targeted program, impacting only those employees whose job will be made redundant or made redundant by IBM's transformation. We do not see any other option than to rebalance our workforce through an involuntary leave program. And that is a hard call to make.
Although IBM does not publicly release details of its layoffs, a Wall Street analyst estimated Big Blue would cut as many as 14,000 workers worldwide in the first quarter of this year. Another analyst estimated upwards of 25% of the company's entire global workforce, or 95,000 workers, would be cut by the end of 2016.
Conrad said IBM employees and former employees who share information with Watching IBM have indicated they expect 350 people to be affected by the IBM Netherlands layoffs.
According to Conrad, current and former Big Blue employees have reported 900 jobs cut at IBM Germany this year, affecting areas such as its Global Business Solutions, Management & Business Support, and Business & Technology Services operations. In addition, Conrad said, reports have come in of 360 IBM layoffs in France, and 233 IBM job cuts in Belgium.
[Read IBM Denies Layoff Size as Salesforce CEO Woos Talent.]
The European Works Council (EWC) issued a statement regarding IBM's job cuts in the region. According to the EWC, six weeks after its Jan. 27 job cuts, IBM announced on March 16 a second headcount reduction almost 50% higher than the first round of cuts. The EWC did not specify the number of jobs actually cut, but rather provided a percentage of the anticipated workforce affected.
"New in IBM's restructuring approach is the strong focus on involuntary reductions," the council said. "The EWC has never agreed with restructurings, but could not be against a voluntary, fair and respectful approach. Now IBM clearly seems to break with that tradition and choses [sic] to apply involuntary, US based methods in Europe as well."
What is the takeaway for US IBM employees as Big Blue employs a new job cut strategy in Europe?
According to Conrad: "That the future for employment is bleak and that no one is safe."