Is IBM set to perform the largest employee cull in history?

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Since the report was published IBM has since stepped in to rubbish the report.

According to a report published on Forbes, IBM is set to perform the largest corporate employee cull in history. The report comes from long-time Silicon Valley journalist Robert X. Cringely. According to Cringley, 110 000 jobs could be on the line if the report is indeed factual.

Since the report was published IBM has since stepped in to rubbish the report. According to IBM, it is cutting jobs, as disclosed in its latest earnings report published last week, but those reductions will affect “several thousand” employees, a “small fraction” of what Forbes reported. This is according to an emailed statement from IBM to Reuters.

According to IT World, Cringely revealed that the mainframe and storage areas will see deep cuts, which would be counterproductive considering IBM announced the new Z13 mainframe and hopes it will stimulate sales. That won’t be easy when you cut the people who are supposed to sell it. Cutting storage in the era of Big Data and Data Lakes, where storage is vital to these concepts, also seems shortsighted.

IT World also revealed that Cringley stated the following: “And you have to wonder what a layoff of 110,000 people will do to the firm. That has to be jarring. I remember an old advertisement from the print days that said “What’s worse, getting laid off on a Friday or being told to pick up the slack on the following Monday?” This will be undeniably upsetting to the survivors.

The question I have to ask is why isn’t Rometty one of the 110k. IBM has seen 11 straight quarters of declining revenue and it’s hemorrhaging customers, according to both my source and Cringely. It’s becoming apparent she is not up for the job and can’t pull the company out of its nose dive.

Cringely said the layoffs will begin next week and by the end of February, all of the employees will be gone. If nothing else, IBM’s first quarter numbers will take a monstrous hit from the severance packages for 111,000 employees. To say nothing of what this will do to its customer confidence.

In a follow-up post, Cringley stated that: “IBM doesn’t like me. After my column last week predicting massive cuts at the giant computer company, IBM now says I’m wrong, and that there will be nowhere near 110,000 IBM employees laid off. But like my young sons who never hit each other but instead push, slap, graze, or brush, I think IBM is dissembling, fixating on the term 110,000 layoffs, which by the way I never used. Whatever the word, what counts is how many fewer people will be paid by IBM on March 1 compared to today.”

“The company has a bad year, so what do you do? Throw a large number of employees under the bus. By any measure this will be a big staff reduction,” Crigley stated.

According to Cringley, “Another source told me the plan was to give the people notice before January 28th so they would be off the books by the end of February — one month.  That implies a lot of firings, offshore staff reductions, contractors released or strongly motivated early retirements. None of those are layoffs.  There will probably be lots of normal layoffs, too, with the required notice. I’m told that senior managers throughout IBM have been pleading for the last few months with higher-up executives not to go through with this because of the risk of consequences such as IBM “breaking” accounts or failing to meet contract obligations. IBM’s customers are going to be the biggest casualty to this week’s staff reductions. That is the message IBM is likely trying to avoid.”

Over the past 12 months IBM’s share price has declined by 12%. In relation to Cringley’s report, IBM stated the following: “IBM does not comment on rumors, even ridiculous or baseless ones. If anyone had checked information readily available from our public earnings statements, or had simply asked us, they would know that IBM has already announced the company has just taken a $600 million charge for workforce rebalancing. This equates to several thousand people, a small fraction of what’s been reported.”

Darryl Linington