IBM is to lay off more than one in 10 workers across the UK Technology Support Services (TSS) division, with insiders telling us that some areas will be hit so severely that clients will inevitably feel the pinch.
The protracted redundancy process for TSS, a unit of Global Technology Services (GTS), began in late 2017 but has been beset with issues: staff expressed an interest in voluntary redundancy and had that agreed by Big Blue management, only to be told they might not be allowed to go after all.
Notes from the TSS Employee Consultation Committee, seen by us, have finally confirmed the number of staff that will leave, with 125 set to be ex-IBMers by the summer. This is lower than the 153 first put at risk.
Broken down, 10 out of 95 heads in sales will go; 54 out of 557 people in service delivery for hardware/software and ATMs are to be chopped; and 61 of 125 services management and ops folk will leave.
The document revealed staff are worried about the headcount that will be left to provide support to customers. In it, one ECC rep said he had “raised a concern that the proposed redundancies, in addition to attrition in the hardware domain, posed a significant business risk”. This was “noted” by IBM, it added.
IBMers have told us of individual teams being obliterated with, in some cases, more than half of the personnel set to leave. One told us: “I am being dumped on the scrap heap" by the latest cost cutting in the support unit.
“The out-of-hours support is being compromised to save money. IBM customers are paying for a service that will be depleted,” our source added.
El Reg has decided not to publicly reveal that impact on specific teams because we don’t want to cause impacted employees any more grief than they are already facing.
Twenty-one staff are leaving on a voluntary basis although 35 had earlier put their hand up to take the payoff - statutory minimum terms have been offered to all.
The “voluntary exits” will be told of their fate at the end of May and those being forced out of the door will be notified on 15 June. Both sets of leavers will be expected to work a ten to 12 week notice period.
The morale of many staff fed through this latest redundancy programme is understandably on the floor - IBM has waged multiple programmes in the last couple of years. This is in addition to the perennial challenges to cut other staff costs including travel budgets, meal allowances, etc.
Job cutting is also featuring heavily in another part of IBM’s Global Technology Services business, IS Delivery, which also confirmed in late November that it was blood-letting - with one in three or 362 out of 1,118 positions expected to be chopped. Again here, the programme was delayed as IBM agreed to let staff leave and then changed its mind.
The grand plan from Big Blue's senior management is to employ six out of 10 GTS staff in offshore locations, two in 10 in near-shore offices and two in 10 onshore. This is all designed to improve margins for shareholders.
IBM had hired consultancy Bain & Company to plot a way forward for GTS, and the advice given was that IBM should not replace more than 10,000 positions globally as those staff were leaving of their own volition. IBM then claimed it might not take this advice.
According to a report published in December by Wall Street analyst Sanford Bernstein, IBM used $92bn cash to fund share buy-backs from 2012 to 2017 instead of investing the money to do something more radical.
IBM only emerged from 22 consecutive quarters of revenue slippage earlier this year when it finally broke that duck by reporting whopping sales growth of 1 per cent in its calendar Q4 of 2017. ®