International Business Machines Corp (IBM) is planning to lay off around 10,000 of its employees to cut down costs on its services units showing slow growth. It does so as it prepares to split off its traditional technology services business from the rest of the company
The company announced last month that it would spin off its basic technology services business, which maintains, supports and upgrades the computing operations of thousands of corporate customers. The remaining business, which will retain the IBM name, will focus on faster-growth fields like cloud computing and artificial intelligence, which the company hopes will return it to revenue growth. It will also include its hardware, software and consulting services units. The technology support which would be split off has not been named yet.
“We’re taking structural actions to simplify and streamline our business,” said IBM Chief Financial Officer James Kavanaugh in October.
IBM conducts these shedding of employees, which it calls “rebalancing”, yearly. This “rebalancing” aims to cut employment in slower growing operations and hire workers in growing operations. IBM had 352,600 employees worldwide at the end of last year.
These cuts in preparation of spinoff would be much deeper than IBM has conducted in recent years.
“Our staffing decisions are made to provide the best support to our customers,” the company said in a statement, adding that it would “also continue to make significant investments in training and skills development” of its remaining workers
The spin-off of its services unit is the first big move by Chief Executive Officer Arvind Krishna, who took over from Ginni Rometty in April and has been pushing to revive growth after almost a decade of shrinking revenue.
The current round of job cuts is expected to be completed by end of the first half of 2021 and the separation into two companies by late next year.
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