IBM is urging its employees to volunteer for layoffs as part of a new round of global job cuts.
The company’s latest initiative, termed “Resource Actions,” is set to impact various departments globally, with a particular focus on Europe. Enterprise Operations & Support (EO&S), CIO, HR, and Real Estate departments are expected to bear the brunt of the layoffs.
This development comes as no surprise to those closely following IBM, as it was hinted at during a Q4 earnings call last month.
Despite IBM characterising this round as “transformative” rather than financial, the company’s CFO, James Kavanaugh, previously outlined a goal of achieving a $3 billion annual run rate in savings by the end of 2024—exceeding their initial ambition.
Insiders have revealed that 80 percent of the reduction target is concentrated on Enterprise Operations & Support (EO&S), Q2C missions, Finance & Operations (including Procurement), CIO, HR, Marketing & Comms, and Global Real Estate.
Europe will take the brunt
The European Works Council (EWC) has informed staff that approximately 50 percent of IBM’s reduction goal will affect staffing levels across Europe. Meetings between IBM and the EWC commenced this month, but neither party has disclosed the specific number of employees affected or the volunteers sought.
While seeking voluntary redundancies is IBM’s preferred approach, the company has not provided information about the total population targeted for layoffs or the number of volunteers sought. Slovakia is expected to be most affected, with around a third of IBM’s European cuts impacting its International (shared services) Center in Bratislava. Significant staff reductions are also anticipated in Hungary and Bulgaria.
Responding to inquiries, IBM released a statement, denying that the initiative is solely a cost-saving measure. The statement asserts that IBM’s workforce rebalancing is driven by increased productivity and a strategic effort to align the workforce with the skills in demand, particularly in areas such as AI and hybrid cloud.
In its latest financial report, IBM disclosed a four percent revenue growth to $17.4 billion for Q4, with an operating profit of $3.75 billion. The company had initially aimed for $2 billion in run-rate cost savings by the end of this year but raised the target to $3 billion, emphasising that any financial savings will be reinvested in technical and industry skills.
