IBM, $IBM, asks employees to volunteer for layoffs, targets 80% cuts in key departments, including HR
IBM, $IBM, asks employees to volunteer for layoffs, targets 80% cuts in key departments, including HR.
IBM is inviting employees interested in voluntary redundancy to step forward as the company initiates a new wave of global job cuts, with a focus expected on roles in Europe and certain departments.
The company, known to euphemistically refer to layoffs as a "Resource Action," hinted at this move during a Q4 earnings call last month. While IBM has characterized this round of cuts as "transformative" rather than purely financial, it aligns with the company's goal, as discussed by CFO James Kavanaugh in January, to achieve $3 billion in annual savings by the end of 2024—a target that has expanded by a third from its initial ambition.
Sources indicate that 80% of the reduction target will affect Enterprise Operations & Support (EO&S) and Q2C missions, Finance & Operations (including Procurement, CIO, HR, Marketing & Comms, and Global Real Estate).
The European Works Council (EWC) has reportedly informed employees that approximately 50% of IBM's reduction goal will impact staffing levels across Europe. Meetings between IBM and EWC have commenced this month.
As is often the case, IBM is prioritizing voluntary redundancies over involuntary layoffs. However, specific details such as the total number of employees in scope for redundancies or the desired number of volunteers have not been disclosed by sources or confirmed by IBM.
Slovakia is expected to be significantly affected, with around a third of IBM's cuts in Europe targeting its International (shared services) Center in Bratislava. Additionally, the Center in Hungary supporting EO&S/Q2C, as well as the Finance function in Bulgaria, are anticipated to experience substantial staff reductions.
In Q4, IBM reported a four percent revenue growth to $17.4 billion and an operating profit of $3.75 billion. While IBM initially aimed for run rate cost savings of $2 billion by the end of this year, the company has extended that target to $3 billion.