The implication is that Big Blue is reducing its wage bill, not adjusting its business model

IBM CEO Ginni Rometty in Bangalore (c)IBM/AP

IBM CEO Ginni Rometty addresses company’s Indian workers in Bangalore

Late January has long been tech giant IBM’s favourite time of year to announce planned redundancies, and every year seems to bring more. At an Extraordinary Meeting on 27 January, the company revealed what commentators took as the 2016 round of “work rebalancing” sackings — around 400 workers from IBM’s Global Technology Services, Global Business Services and UK laboratories would be “let go”. But just seven weeks later, on 16 March, another Extraordinary Meeting rolled round on another Wednesday and an even bigger restructuring plan was revealed.

According to Marc Born, secretary of the IBM European Works Council (EWC) a second wave of cuts is on the horizon. “The total foreseen headcount impact of this second reduction is almost 50 percent higher than the first round of job cuts,” says Born. “The combined impact of both restructuring actions varies by country, but primarily Western European countries are confronted with reductions which sometimes exceed 10 to 15 percent of current staff.” Over the past four years, ‘Big Blue’ – once the colossus of the computer industry – has conducted some ten rebalancing actions in Europe which have restructured, or destroyed, around a quarter of the company’s jobs in the continent.

The EWC represents IBM workers at a European level through its members drawn from UNI Global Union and IndustriALL. These organisations have also formed the IBM Global Union Alliance which, although unrecognised, attempts to negotiate with the company worldwide. The EWC, which IBM is legally obliged to recognise, has requested, but not received, an explanation into the company’s business case or “master plan” behind its actions in Europe, and has pointed out that “Europe was the best performing IBM-geography in 4Q and FY 2015 and again the only one delivering growth.”

Once a major hardware supplier, over the last two decades IBM has refocused its business on to consultancy and the supply of IT services. The current wave of European sackings seems to be part of a global strategy to move towards lower cost operations based on off-shoring and so-called “cloud computing”, or the use of remote servers to deliver IT services.

Only a few weeks ago, the company announced that up to a third of its US-based workers would lose their jobs. “It is bad, really bad. It’s a mass layoff today,” said one IBM worker. “It is a sad day for IBM. People are being told not to talk about it. I was told by a manager in getting the news [of my job being made redundant], who was reading off of a script, that one third of the US workforce is being ‘rebalanced,’ which is what they call it.”

The idea that the layoffs and sackings we are seeing at IBM has anything to do with “rebalancing” (usually assumed to mean adjusting an employer’s skill-sets) is broadly dismissed. As one commentator on the IEEE Spectrum website says, “The majority of the layoffs are [believed to be] a matter of ‘workforce relocating,” specifically, out of the US to India, Brazil Costa Rica and other countries with cheaper labor costs.”

Posts on the Watching IBM Facebook page (which provides an independent forum for workers in the notoriously anti-union company) seem to confirm this. For example, ” “At the beginning of 2015 our department had 25 people in it. At the beginning of 2016 our department has 13 in it. June 1, 2016 the department will be 100 percent in India and 0 percent in US.”

Further confirmation comes from IBM’s recently revised redundancy terms, which in the US reduce a potential maximum of six months’ benefits to one month’s worth, and (in the UK, at least) offer the statutory minimum of between half a week and one and a half weeks’ salary for every full year served, with length of service capped at 20 years and weekly salary capped at £475.

Despite some 70,000 workers losing their jobs in 2015, the company’s headcount remains the same as it was at the beginning of 2015 – an estimated 378,000 worldwide. The implication of all this is that Big Blue is reducing its wage bill, rather than adjusting its business model.

In the company’s defence, a spokesperson told the IBTimes UK website that “IBM has begun a consultation process with employee representative groups. IBM continually remixes skills – our clients expect no less as they look to IBM to help them take advantage of innovations and new technologies. Globally, IBM continues to invest in skills needed for the future.”

Well that would be fine, if it wasn’t for the facts.

Last year, the IBM Global Union Alliance demanded that IBM impose a moratorium on all job cuts, globally recognise trade unions, and improve working conditions and appraisals. Regrettably, the company has simply ignored these demands. More recently, the EWC has registered its major concern that the current job cuts will be compulsory. According to a statement, “The involuntary approach triggers extremely negative sentiments, unrest, stress and disengagement amongst the European workforce. The EWC wonders if IBM is aware of the destructive impact of the chosen approach to the company’s brand image and reputation […] The EWC believes that IBMers should leave the company as ambassadors, not as opponents or enemies.”

Unfortunately, IBM seems not to care about the impact of mass layoffs on its “brand image and reputation”. Like so may businesses today, its only concern is the bottom-line.

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Gary Herman

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