In what may turn out to be the biggest-ever layoff drive among global biggies, IBM is believed to have started cutting jobs globally on Wednesday, with first casualties said to be in India.
Poor fourth-quarter results reported last month, marked by a 26% slump in hardware revenue, is suspected to be the main cause of layoffs. Worldwide, IBM employs 4.3 lakh people and reports say some 13,000 jobs are likely to be cut as the tech major performs a “global rebalancing” act, termed “resource action” or RA, that could save about $1 billion in costs.
WralTechWire (WTW), a tech-related website, quoted IBM staffers in Bangalore as saying that “people broke down after seeing the inhuman treatment. Laptops along with the cases were confiscated, so several employees were seen crying and exiting building carrying and balancing their personal belongings with their two hands”. Unofficial estimates put the sacking number at around 1,000 in Bangalore alone.
IBM did not confirm the layoff and did not reply to emails from dna till late on Wednesday night. But sources confirmed that hundreds of IBM staffers at its Bangalore office were asked to leave suddenly. Some of them, it is said, were given just a couple of hours notice and asked to leave behind their laptops and vacate the premises pronto.
Talk among recruitment experts is that IBM may be targeting up to 2,000 job cuts in India where it employs 1.3 lakh in all. The worst affected could be the Systems Technology Group where 25% of the hardware division, or a few hundreds of employees, are expected to be axed, following the decision to sell its global low-end x86 server business to Lenovo for $2.3 billion, also entailing transfer of some 7,000 IBM staff to Lenovo.
“That is a guesstimate since layoffs happen over a period of months. Job cuts will be less in India than elsewhere since manpower costs here are low,” said an HR expert in Bangalore. In India, Bangalore is a key centre for IBM with major office blocks in Manyata Embassy Business Park in Hebbal and Embassy Golf Links near Domlur.
An HR expert said any jobs cuts at IBM would not be “surprising since MNCs have a history of laying off workers”.
Kris Lakshmikanth, co-founder of Bangalore-based search firm HeadHunters India, said any layoffs would not happen overnight but gradually. “Firms such as IBM are also not giving any salary hikes this time.”
Globally, other tech firms like Intel and Texas Instruments are reported to be laying off 5,000 and 1, 100 employees respectively. Even in India, there is speculation that iconic IT firms may well lay off up to 2,500 staff each during the January-March quarter.
Another source told WRW website: “IBM India’s STG is doing ‘RA’ and it is very deep and numbers are huge. It’s a slaughter.” Yet another source told WRW: “RAs expected to last till Friday.”