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IBM to erase 14,000 people from the payroll – Wall St analyst

Jobs to be bundled on a plane and flown to lower labour cost countries

Up to 14,000 IBMers worldwide could leave under the latest redundancy programme, according to Wall Street moneymen.

In a research note from Bernstein that was sent to customers and us, senior research analyst Tony Sacconaghi, said it appears IBM is taking “meaningful workforce rebalancing actions”.

He highlighted a $1bn Japanese tax gain Big Blue has received, and pointed out that in the past the company had matched the proceeds from dispositions or IP sales with workforce restructuring expense.

“It now appears that IBM is likely to do the same in FY Q1 - i.e. realise a $1 benefit to earnings per share in Q1 from the tax settlements and incur a similar amount of restructuring expense.

“We have estimated that it has historically cost IBM about $70,000 to eliminate an employee, which would imply a workforce reduction of about 14,000 employees this quarter,” he said.

The note from Bernstein estimated IBM saved $6.78bn from “workforce rebalancing” in the last decade by cutting some 96,986 jobs.

In the UK alone, Big Blue has put 1,352 people at risk in the Global Technology Services wing, with 185 to be told of their fate by April. Over at UK Labs, 123 out of 900 heads are going to be chopped.

And company insiders have now told us that 73 peeps in Global Business Services (GBS) with “non-strategic skills” and 20 partner-level staffers are also being lined up to exit the building on a permanent basis.

The actions at GBS, our well placed sources claimed, include sending more jobs to India and other Global Delivery Centres.

IBM, like HPE and other old-world enterprise vendors, is trying to cut costs to make a profit out of shrinking revenues, following 15 straight quarters of falling sales. ®

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