May 4, 2005 1:48 PM PDT

IBM to chop more than 10,000 jobs

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IBM plans to cut between 10,000 and 13,000 positions worldwide and to reorganize its management structure.

The changes, which will mostly affect IBM's European operations, will result in a charge of between $1.3 billion and $1.7 billion in the second quarter this year and "yield benefits" in the second half of the year, the company said Wednesday.

The restructuring, a significant move for the company, was expected following Big Blue's disappointing first-quarter 2005 earnings. Last month, IBM Chief Financial Officer Mark Loughridge said the company would undergo a "sizable restructuring" to address weak areas, notably in Europe.

IBM said employee reductions will include both layoffs and voluntary departures. The majority of the cuts will be in Europe, where the company has initiated discussions with labor organizations.

The reorganization involves the streamlining of management in Europe. IBM said it will eliminate its pan-European management layer to reduce internal bureaucracy.

"IBM will create a number of smaller, more flexible local operating units in Europe to increase direct client contact," the company said in a statement.

The plan also calls for IBM to move some of its European personnel who work in its IBM Global Services division and consolidate them in fewer locations worldwide.

Loughridge will offer more details about the restructuring Thursday morning, the company said.


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An Internal (Operations Research) May Be Needed!
For a company with the technological prowess such as the one that IBM possesses... there may be a need for the company to conduct an internal examination thoroughly (operations research...) to determine some of the reasons for certain short comings (feedback mechanisms, real-time business intelligence implementation) within its worldwide operations.

Factors of importance to be considered will be that of its business partners and existing customers who will need to be assured of a continuation of the expert level of services that they have become accustomed to from the information technology giant. Additionally, with looming technological threats from companies based in countries such as China and India:

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the company needs to consider the overall effect also with regards to the impact of anticipated staff reductions - will the company be in a position to withstand these impending threats in the future having already sold its PC business Division to China's Lenovo!
Posted by (187 comments )
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Our Lady Of Perpetual Layoffs
The announced cuts amount to a 10-13% RIF in Europe (100,00 employed). IBM has been in perpetual layoff mode for several years now, most recently in 2004. They'll probably just shift the work of the laid off (old) Europeans to (new) India and China. Good time for Walmart to open some new stores in Europe to soak up the excess.
Posted by Stating (869 comments )
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