Off-Prem

IBM quietly axing thousands of jobs, source says

We did warn you, Big Blue tells The Reg, as Cisco also cuts staff as promised


IBM has been laying off a substantial number of employees this week and is trying to keep it quiet, our sources have said.

One IBM employee told The Register that IBM Cloud experienced "a massive layoff" in the past few days that affected thousands of people.

"Unlike traditional layoffs, this one was done in secret," the insider said. "My manager told me that they were required to sign an NDA not to talk about the specifics."

Multiple posts on layoff-focused message boards and corroborating accounts with other sources familiar with the IT giant's operations suggest the cuts are large.

Asked to confirm the layoffs, an IBM spokesperson told The Register, "Early this year, IBM disclosed a workforce rebalancing charge that would represent a very low single digit percentage of IBM’s global workforce, and we still expect to exit 2024 at roughly the same level of employment as we entered with."

IBM's first-quarter 2024 earnings report said that the mainframe goliath took a $400 million "workforce rebalancing" charge to cover the cost of planned layoffs. That's after a $300 million "workforce rebalancing" charge in 2023. At the beginning of 2023, IBM announced plans to cut 3,900 jobs.

With about 288,000 employees worldwide at the end of 2023, the "very low single digit percentage" possibilities for 2024 might be 1 percent (2,880 layoffs), 2 percent (5,760 layoffs), 3 percent (8,640 layoffs), or more. Assuming a fixed cost per employee, last year's charge and job cut disclosure suggests about 5,200 positions would be eliminated with a $400 million charge.

Last year, CEO Arvind Krishna said IBM expected to replace around 7,800 jobs with AI, though no specific time frame was provided. His corporation's stock price is up 33 percent year to date to $215 a share.

IBM's spokesperson did not respond to a request to be more specific about the number of layoffs and to explain where new roles were being hired to maintain a flat headcount.

According to our source, the job cuts have been directed mainly at senior-level programmers, sales, and support.

This individual's job is headed to India, we're told, reflecting a hiring freeze in the US. But hiring is said to be ongoing in India.

IBM has a history of moving jobs to India.

As with prior layoffs, or "resource actions" to use IBM's euphemism, we're told those affected are substantially in the 50-55 age bracket with 20-24 years of seniority.

"It seems exclusively people in L7 and L8 and L9 bands, at the top of the band in payment structure," the insider said.

Despite numerous past and ongoing age discrimination lawsuits, IBM maintains it does not systematically discriminate on the basis of age. ®

And not just Big Blue

Last month, Cisco announced it was axing roughly 6,000 employees. True to its word, it is this week giving those thousands the bad news and laying them off. Staff at AppDynamics, Splunk, Cisco Services, Cisco Commerce, sales, Cisco Talos, and other sections are said to be affected to varying degrees.

This follows 4,000 or so folks cut at the start of 2024.

In a statement to El Reg today, a Cisco spokesperson said:

Cisco is laser focused on growth, consistent execution, and resetting our cost structure as we invest in AI, cloud, and cybersecurity.

To focus on these key priority areas, on August 14, 2024, we announced a restructuring plan, impacting approximately 7 percent of our global workforce, to allow us to invest in key growth opportunities and drive more efficiency in our business.

The care of our people is a top priority, and we will provide full support to our employees throughout this process.

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