Insiders say IBM's broader return-to-office plan hits older, more expensive staff hard

IT giant doing whatever it takes to reach $300 a share

IBM is looking to reduce expenses through what's described as a co-location program that, according to current and former employees who spoke with The Register, appears to be designed to drive out older, more expensive workers.

The mainframe giant's recent return-to-office (RTO) push is already arguably achieving that, namely forcing out those kinds of workers, but we're told that Big Blue is taking a broader approach, echoing a 2016 initiative from then marketing chief Michelle Peluso.

As we reported at the time, marketing staff in the US were directed to work from one of six strategic locations in the country. That required marketing workers to relocate, with a modest moving allowance and no guaranteed salary adjustment for cost of living changes, or to leave the company.

That program was extended to IBM's Software and Systems unit in 2017.

IBM, like Amazon, Dell, and other tech firms, wants employees allowed to work remotely during the COVID pandemic to resume working from a corporate office – ostensibly for better communication and team cohesion.

In 2024, IBM Consulting instructed executives and people managers to work from a corporate office at least three days per week. IBM Software issued similar orders to employees several months earlier. Earlier this month, Finance & Operations employees faced an RTO demand.

But IBM's co-location program affects workers who have never worked from corporate offices.

This program is intended to get people not only back in the office but bring teams with common work functions together into the same location

"IBM is implementing a 'co-location' program," an IBM employee told us. "This program is intended to get people not only back in the office but bring teams with common work functions together into the same location.

"In 2024, IBM mandated all US managers back into the office. This was the start of co-location. Now, rolling out in phases, all US employees will be required to co-located or resign from IBM."

In America, we hear, IBM presently has eight strategic locations where employees are expected to work: Two in New York, two in Illinois, two in Texas, and two in North Carolina. In New York City, IBM recently opened a new flagship office, which we're told IBM expects to be occupied by employees.

There are plausible benefits for working from an office, but there are also many studies that highlight the advantages of supporting remote work and the detrimental effects of RTO directives.

"IBM has recently mandated that all employees co-locate in strategic locations or resign," our source explained. "This included all employees who started working from home during COVID as well as those who have been working from home for 15-plus years."

IBM has recently mandated that all employees co-locate in strategic locations or resign

Many of the employees who have given more than a decade to the IT titan have established lives in communities where they've participated in civic and religious life, and perhaps have raised children. They're often of middle-age, with families that strong social ties, within two or three years of retirement eligibility.

Our sources suggest that co-location amounts to age discrimination because older, more established workers are less willing to pick up stakes and move.

"For years, IBM has been hiring only into strategic locations, which implies they are selectively targeting those who are established in their home offices and have been for 20-plus years," we're told.

A former IBM employee we spoke to, recently laid off, agreed with the current employee's interpretation of events about how co-location will affect older workers.

"The company is not going to pay to relocate anybody," the former employee said. "And you know, it's a way to get rid of a bunch of people and a bunch of older people."

Within IBM, as the corporation acknowledges on its website, employees have long joked that its initials stand for "I've Been Moved." But as we hear it, that came about at a time when IBM paid for relocations.

IBM, despite being subject to numerous age discrimination lawsuits in recent years, maintains that it does not systematically discriminate, on the basis of age or anything else.

In unofficial IBM discussion forums like Reddit, those posting about co-location share the view voiced by our sources about the impact of the co-location program. For example, one individual claiming to have been with IBM's software group for more than 20 years alleges being asked to relocate when fellow team members were not.

Another forum participant replied, "It's a stealth layoff. Same thing happened to me – I was asked to move to a strategic site to better 'collaborate,' but no other members of my team were even at this new location."

In a more recent thread, a forum poster says, "Just keep in mind, the object of co-location is to get you to quit. It is statistically known that the majority of people will not move, and decide to leave. This is what they are hoping from you."

The Register asked IBM to explain why it's pursuing its co-location plan and we've not heard back.

Co-location is one aspect of a broader workforce rebalancing strategy, which appears to be an ongoing activity at IBM. "[CEO] Arvind [Krishna] said in an employee broadcast in March 2024 that 'skills rebalancing will be perpetual, and the average shelf life of skills now is three to seven years; where it used to be 20-plus years,'" our source said.

CFO Jim Kavanaugh, our source said, has repeatedly talked about getting IBM's stock price to $300 per share; it currently stands at $264. "I think this is just cutting expenses," our source speculated, adding that colleagues have said the move-or-leave demands imperil stock option vesting. "A couple of my peers are trying to hang on to get their vested stock options," we're told.

The implication is that the decision deadline means those who refuse to move and have to leave the company may miss out on stock grants pegged to a future date, a financial loss to them but a gain for IBM.

As to why this is happening now, our source within IBM described a conversation between an employee and manager in which the manager described an executive-level debate about whether to do a layoff, known internally as a resource action, or a co-location program.

"A resource action would target employees whose job has been eliminated or employees who do not meet performance requirements," our source said. "Co-location would target a much broader group of work-from-home or remote employees. Most of those who are long-time loyal employees who have established ties in their communities. The company chose to roll out the co-location program."

This executive, it's claimed, subsequently said there would be no resource actions in 2025, "presumably because [IBM] will hit the attrition target with co-location." ®