IBM is planning to cull about 10,000 jobs in Europe in order to lower costs ahead of its split into two businesses.
According to a story by Bloomberg, the wide-ranging job cuts will impact about 20% of IBM's staff in Europe, according to unnamed sources. The U.K. and Germany will have the most job cuts while Poland, Slovakia, Italy and Belgium will also be impacted. As of last year, IBM had about 352,000 employees serving customers across 170 companies.
Bloomberg reported that IBM announced the job cuts in Europe earlier in November during a meeting with European labor reps, according to a union rep that was briefed on the meeting.
“We’re taking structural actions to simplify and streamline our business,” said IBM Chief Financial Officer James Kavanaugh during the company’s third-quarter earnings call in October, according to a Seeking Alpha transcript. “We expect the fourth-quarter charge to our operating results of about $2.3 billion.”
IBM didn't respond to an email from FierceTelecom seeking confirmation on the job reductions.
“Our staffing decisions are made to provide the best support to our customers in adopting an open hybrid cloud platform and AI capabilities,” an IBM spokeswoman said in an emailed statement to Bloomberg. “We also continue to make significant investments in training and skills development for IBMers to best meet the needs of our customers.”
Last month, Big Blue announced it was splitting up the 109-year old company in order to better focus on its hybrid cloud business, which it sees as a $1 trillion market opportunity.
IBM will split off its IT infrastructure services unit, which is comprised of its managed infrastructure services other than hybrid cloud, into a new company by the end of next year. The new company, which is being called "NewCo" until a new brand is in place, provides technical support to more than 4,600 clients in 115 countries.
According to Bloomberg, the bulk of the European job cuts will take place across the legacy IT services businesses. Those employees manage day-to-day infrastructure operations such as managing client data centers as well as traditional IT support for installs, operations and repairs for the equipment IBM builds.
"There are layoffs going on now - client execs, digital sales, and hearing tech sales next, as IBM expect the sellers to pickup doing demos and the technical parts with the customers, on the FULL portfolio!! – the inmates have taken over the asylum," according to a post two days ago on thelayoff.com in response to a question about whether layoffs were taking place.
Big Blue has been honing its focus on the cloud ever since it bought open source vendor Red Hat for $34 billion last year. As part of that deal, Red Hat CEO James Whitehurst came over to IBM after which he was later named president.
CEO Arvind Krishna, who led IBM's cloud computing business prior to his promotion, led IBM's charge to buy Red Hat. Krishna replaced former CEO Ginni Rometty, who is now IBM's executive chairman, in April.
In May, The Wall Street Journal (pay wall applies) reported that IBM would be cutting thousands of employees across several sectors at IBM, including the Global Technology Services (GTS) division, which offers IT outsourcing.
Under Krishna's direction, IBM has doubled down on hybrid cloud by launching IBM Cloud for Telecommunications earlier this month to target telcos. Also this month, IBM announced new automation and data capabilities for its hybrid cloud software portfolio as well as the purchase of application performance monitoring company Instana, which marked its latest investment in hybrid cloud and AI capabilities.