IBM To Cut As Many As 5,000 Jobs

An Employees Union source within International Business Machines Corp. (IBM) has announced that IBM will cut over 4,000 employees (possibly 5,000), mostly from the Global Business Services group, mainly in the US, starting today, Thursday, March 26. The work may be sourced to IBM’s facilities in India. The company had a total workforce of 398,455 as of the end of 2008, with about 115,000 in the US.

From a geographic perspective, the Americas’ 4th-quarter revenues were $11.5 billion, a decrease of 2.0% year-over-year (up 2.0%, adjusting for currency). Revenues from Europe/Middle East/Africa were $9.5 billion, down 12.0% (1.0%, adjusting for currency). Asia-Pacific revenues decreased 1.0% (1.0%, adjusting for currency) to $5.5 billion.

The Global Business Services division generated $4.7 Billion in the 4Q08 and had the lowest gross profit margin of all of the divisions within IBM. As a service organization this division is labor intensive.

Reductions in the workforce and the transfer of work to lower cost countries are not unexpected in the current economic climate. The impact of this reduction will increase this division’s gross margin in the 2nd half of 2009.

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