Now you see them... IBM made over 800 UK jobs vanish in 2018 despite improving fortunes

Axe fell on sales, marketing and product development


One in 15 IBM jobs in the UK were rubbed out during calendar 2018 despite local financials returning to growth.

Profit & loss accounts filed at Companies House (PDF) have confirmed some 11,297 workers were on the payroll at the end of the year, compared to 12,124 the year before. Big Blue made reductions in sales & marketing and product development, but wasn't more specific about where or how hard the axe fell in its various divisions.

In the past half-decade, IBM has run multiple "workforce reduction programmes" to get rid of people who it claims did not have the skills to match its commercial requirements for the 21st century. The process has helpfully let IBM cut costs by offshoring a chunk of the workforce.

After a wobble in 2017, top-line numbers improved with turnover up 3 per cent year-on-year to £3.823bn, with gains made across the board in hardware, software and services areas.

Technology Services and Cloud Platforms grew a little more than 15 per cent to £1.259bn; Global Business Services was up 7.45 per cent to £1.004bn; Cognitive Solutions shrank to £573.4m from £735.5m; and Systems jumped by almost a third to £213.3m as it was boosted by a refresh of the Z mainframe category.

Intercompany trade – exporting services, including R&D to IBM's other country operations – brought in £741m compared to £787.7m and the "Other" section generated £32m in revenue, up from £500,000.

The cost of sales left IBM with a gross profit of £241.3m from £191.1m a year earlier, but a hike in admin expenses, along with impairment losses on financial and contract assets, reduced operating profit to £67m, which was way down on the £182.1m reported for 2017.

IBM also recorded an increase of £98.6m to its pension benefit obligations for the defined benefit plan. It was logged as a past service cost. The top-up follows a High Court ruling in October in favour of Lloyds Pension Group trustees that stated Lloyds Bank Plc needed to equalise pension benefits to take into account unequal guaranteed minimum benefits accrued between 1990 to 1997.

The final salary pension plan at IBM was closed in 2009 and the business then launched legal proceedings to seek a declaration that it had acted within the law. A High Court judge ruled against IBM in 2014, but another ultimately backed company in a final judgement in 2017.

The company has had to face 285 individual actions against it from former staff that have alleged constructive dismissal and age discrimination. At least some of the cases have now been settled.

Once income from investments and other costs were accounted for, IBM UK reported a profit before tax of £114.4m for the year. It received a tax credit of £9m from HMRC, based on adjustments from prior years, that left it with a net profit of £123.4m.

Globally, IBM is trying to morph into a business that makes its money from selling clouds, analytics, security etc. but has reported four consecutive quarters of declining sales. ®

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