IBM finally shutters Russian operations, lays off staff

Axing workers under 40 must feel like a novel concept for Big Blue

After freezing operations in Russia earlier this year, IBM has told employees it is ending all work in the country and has begun laying off staff. 

A letter obtained by Reuters sent by IBM CEO Arvind Krishna to staff cites sanctions as one of the prime reasons for the decision to exit Russia. 

"As the consequences of the war continue to mount and uncertainty about its long-term ramifications grows, we have now made the decision to carry out an orderly wind-down of IBM's business in Russia," Krishna said. 

As of writing, IBM's Russian website is no longer available.

IBM was among a long list of companies that suspended operations in Russia when President Putin invaded Ukraine in February. Big Blue didn't stop paying its employees, who Krishna last month said are not at fault and don't deserve to suffer because of sanctions against the Russian government.

Krishna also said IBM's ability to pay Russian employees could be in danger, as the gradual progression of sanctions mean its payroll capabilities in Russia "may go away." Whether or not IBM's payroll capabilities did dry up before its decision to exit Russia is unknown.

IBM's decision to freeze business in Russia led to a $300 million loss in revenues in Q1 2022 that the company easily overcame, beating analyst estimates to bring home $14.2 billion in revenue for the quarter and profits of $622 million. IBM said the earnings were driven by double-digit growth in the company's software and consulting businesses.

Losses thanks to Russia are fairly standard across much of the tech world right now; IBM hasn't even been the largest loser. HP, which announced a full pullout from Russia last week, claimed it stands to lose $1 billion in sales because it's stopped selling products in Russia and Belarus.

Additionally, Adobe said its Russia exit would cost it $75 million in revenue, UiPath lost $15 million, Cisco reported losing $200 million in sales down the tubes, and Schneider Electric handed its Russian operations over to local management and wrote off $315 million.

It's unclear how many people will be affected by IBM's decision to wind down its Russia operations. Reuters said in March the company's LinkedIn page indicated it had more than 1,000 Russian employees, while a spokesperson told the news service today that Big Blue only had "several hundred" employees in the country. 

Krishna wrote in his letter that IBM plans to stand by its Russian employees and will "take all reasonable steps to provide support and make their transition as orderly as possible." ®

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