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IBMers hear sound of axe being sharpened

Up to 16,000 jobs could go

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The rumor mill, being stoked by IBM employees talking on a pro-union web site, has it that Big Blue is getting ready to lay off up to 16,000 employees, or about four per cent of its 400,000-strong global workforce, thanks to the slowing of the economies in the United States and Western Europe.

As usual, the Alliance@IBM, which is where the one and only IBM employees' union in the United States communicates with members, who are part of the Communications Workers of America union, is where people are talking about the rumors they are hearing about layoffs. (You can read through the postings here.)

The IBMese for a layoff these days is a "resource action," and it has been IBM's practice in the past several years to do layoffs by the handful in various divisions and product lines and geographies to keep the aggregate numbers low enough to not trigger a reporting requirement to the Securities and Exchange Commission. There's nothing illegal about this, presumably.

There is a fair amount of churn among the employee base within a $100bn-plus corporation, and IBM has learned to use attrition and laser-focused layoffs in a way that it never did back in the 1990s, when it had massive layoffs. That churn means people are always jumpy, and there are constant whispers about job losses.

This one feels different, and that is because of the precision of some of the rumors, the magnitude of the financial crisis that IBM is trying to sell gear into, and the company's desire to not repeat its bad experience in May 2005, when it had to whack 13,000 employees when its services business went on the rocks. At the time, IBM had 329,000 employees worldwide as 2004 came to a close, and European divisions bore the brunt of the layoffs.

The current whispers suggest that IBM will make the job cuts on January 23, or possibly on January 22, but this is odd timing since IBM will be reporting its fourth quarter financial results on January 20 after the market closes. IBM would very likely announce job cuts that day and may then begin instituting them in the following days; if the rumors start hammering IBM's stock, the company may even pre-announce the Q4 numbers and the layoffs, if there are indeed any layoffs at all.

It appears that employees in the United States will bear the brunt of the job cuts, which is consistent with IBM's move of manufacturing, programming, and logistics operations to India and China.

An IBM spokesperson would not confirm that cuts are coming, giving the standard "we don't comment on rumors or speculation" line.

Two comments on December 23 at the Alliance@IBM site seemed to have the best detail:

The layoff date is January 23rd. Approx. 16,000 employees worldwide will be affected. The majority from the US. I heard this from a 2nd line mgr. Confidentiality agreements were signed in the upper ranks to keep this hush, hush, but nothing this big stays out of the light for long. Good luck everyone. -the fix is in-

And:

My manager is involved in the layoff planning in our division (part of the technology group). He told me the numbers in our division were going to be very large, a lot larger than what the other managers were expecting. He moved half of us onto projects with government funding commitments and thinks he can protect the people he has left, but he's not sure. Nobody wants to fear-monger, but the layoffs are coming. I used to be in management (I got better), and I can see the familiar patterns here (sudden movements of people they are cherry-picking to protect, the way denials are given, the acceleration of the review process so they have the lambs lined up, etc.). -Tom IBM Emp-

Apparently, managers are being told to tell employees they have "no specific information" on layoffs - presumably, if the mutterings turn out to be true, to allow IBM to make a formal announcement inside and outside the company at the same time. But IBMers started getting laid off in December in small numbers already, and the cat is out of the bag. Even if there is not a massive cull, with the surgical employee firing practices Big Blue uses, the number of job losses could be nonetheless large across the entire company. ®

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