IBM may be getting set to make its largest single workforce reduction thus far this year, according to the Alliance@IBM employee union, which says it has heard that the cutbacks will affect about 4,000 U.S. workers at IBM’s Global Business Services unit.
Many positions are being switched over to workers in India, The Wall Street Journal reported Wednesday, citing anonymous sources.
The reported cuts would be just the latest round made by IBM in recent months as the global recession continues. IBM did not confirm the report. The company does “not comment on rumor or speculation,” said spokesman Doug Shelton.
Lee Conrad, the union’s national coordinator, said he has been told by IBM employees that the expected job cuts may take place as early as Thursday. That day already has been dubbed “Black Thursday” in one anonymous post on a message board on Alliance@IBM’s Web site.
If US Global Business Services jobs are shifted to India, they will likely be positions such as application maintenance, application development and network management, versus on-site ERP (enterprise resource planning) implementation jobs, according to Forrester Research analyst Paul Roehrig, who said that he hadn’t personally seen the Journal’s report. IBM’s Markham and Toronto lab would also be likely targets should the company initiate a massive layoff says analyst.
Conrad, national coordinator of the Alliance@IBM/CWA Local 1701, a union that has been trying to organize IBM workers, said the group has been expecting U.S. cuts to the global services unit for some time.
The union has heard that 4,000 jobs will be affected, “but we don’t have any confirmation, as usual,” Conrad said. Canadian IBM workers are telling the union that they are hearing the rumors as well, he said.
“What really bothers us is that if there’s work in India, there’s work here,” Conrad added.
But outsourcing is an inevitable trend given the globalized economy and the tremendous economic pressures companies are facing due to the recession, according to Roehrig.
IBM’s U.S. workforce has been shrinking, while its overseas head count has been on the increase. The number of IBM workers in the U.S. dropped from 121,000 to 115,000 during the course of 2008; however, its overall employee count grew by 13,000 people last year. And already this year, the company has cut more than 4,600 jobs in the U.S. and Canada, according to earlier counts by Alliance@IBM.
The union – a Communications Workers of America local that doesn’t have enough members to gain official recognition as a bargaining unit – has been the source of most of the information about the recent job cuts made by IBM. The company has confirmed that reductions were made, but it hasn’t publicly announced them or said how many workers were affected. In addition, it has refrained from describing the earlier cuts as layoffs, instead saying that they were part of “an ongoing process that we do throughout the year to match skills and resources with our client needs.”
IBM and other companies aren’t required to notify government officials of layoffs unless the cutbacks reach a threshold set in the Worker Adjustment and Retraining Notification Act, also known as the WARN Act. The provisions of that law apply when there are 500 or more layoffs at one location. But at IBM, job cuts can be scattered among different facilities in the U.S. and other countries.
Meanwhile, IBM is also reportedly set to spend billions to acquire Sun Microsystems, a move that would add thousands of employees to its rolls. Neither company has publicly confirmed such talks are ongoing.
Mark Loughridge, IBM’s chief financial officer, indicated that some restructuring was underway at the company during a January conference call about its fourth-quarter financial results. In Loughridge’s prepared remarks, he said that IBM “will continue our focus on structural changes that reduce our spending levels and improve productivity in 2009.”
The message board on the Alliance@IBM Web site lets people post anonymously, so it’s hard to gauge the authenticity of comments – but they’re often detailed, and they use acronyms that are familiar to IBM employees. In one post today, an anonymous poster wrote: “My manager has not said anything to me yet but I am already preparing myself for the news.”
“As businesses become more technology-abled, more and more work will land where it can be done for less,” he said. “Getting there is just devastatingly difficult [for affected workers], and there’s no way to diminish the amount of pain.”