Computer hardware company IBM or International Business Machines Corp recently announced that it is planning to lay off an unspecified number of employees across five states in the United States.
Incidentally, this is the first time the global tech giant is executive layoff exercise under the new Chief Executive Officer Arvind Krishna’s leadership. The company however, declined to comment on any details regarding the development.
“IBM’s work in a highly competitive marketplace requires flexibility to constantly add high-value skills to our workforce. While we always consider the current environment, IBM’s workforce decisions are in the interest of the long-term health of our business,” company spokesman Ed Barbini said in a statement.
He further added, “Recognizing the unique and difficult situation this business decision may create for some of our employees, IBM is offering subsidized medical coverage to all affected U.S. employees through June 2021.”
According to various media reports based on an internal memo sent on the Slack corporate messaging service, the number of affected employees is likely to be in the thousands
“This was far ranging — and historical employment ratings, age and seniority did not seem to matter,” he said. The person asked not to be identified on concern that speaking publicly may impact his severance package.
The cuts also affected employees in Pennsylvania, California, Missouri and New York, where IBM is based, according to people familiar with the matter.
In an attempt to support these estranged employees, the company indicated that it would continue to subsidize medical expenses for laid off employees through June 2021.
Layoffs in the tech industry has become a problem for the United States. In the country, about 30mn people have filed for unemployment benefits and the number is expected to increase in the coming months. Experts are predicting that the world will witness a recession worse than what we have ever seen due to the coronavirus pandemic.
However, it’s unclear how many of IBM’s cuts are caused by the pandemic. The company has suffered years of falling revenue. In an earnings call in January, IBM discussed reducing costs through “aggressive structural actions” to improve the competitiveness of its Global Technology Services consulting unit, which represents about a third of revenue.
IBM was probably due for a workforce reduction, regardless of the current macro situation, as Krishna tries to right the financial ship. The company has struggled in recent years, and with the acquisition of Red Hat for $34 billion in 2018, it is hoping to find its way as a more open hybrid cloud option. It apparently wants to focus on skills that can help them get there.
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