IBM’s reboot as a company to focus more on cloud computing and software under top executive Ginni Rometty led to a massive reduction of its global work force in 2014. And more changes are coming, the tech giant says.
According to a filing with the SEC, Big Blue says it reduced headcount by more than 12 percent, or some 50,000, to under 380,000 from 431,000.
The reduction (38,000) came primarily through the sale of business groups such as the x86 server unit based in Raleigh to Lenovo.
Rometty, who took over as CEO in January of 2012, is not finished, either. IBM has seen revenue drop for 11 consecutive quarters as Rometty restructures Big Blue in her image.
“The company continues to remix its skills and resource needs to match the best opportunities in the marketplace,” the filing reads.
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Reflecting that change, IBM (NYSE: IBM) has more than 15,000 open jobs in areas where chair and CEO Rometty has the company focusing, such as cloud computing and software. IBM’s RTP campus is the site of one in a series of new data centers IBM is building to accommodate new services and software, among them “BlueMix.” The company has a group dealing with the emerging solution for collaborative computing across business networks and with multiple capabilities.
How many workers remain on the IBM payroll in the U.S. and North Carolina is not known outside the company. IBM stopped disclosing by-country work totals in 2010 and also has not disclosed a work force total in North Carolina for several years. IBM cited competitive reasons for not disclosing headcount totals. Alliance at IBM, the union seeking to represent IBM workers, estimated that the company had some 7,500 employees in North Carolina before the x86 sale, which closed last fall.
Based on data from a variety of sources, the union has reported that IBM has continued to cut workers in the U.S. to well under 100,000.
According to the Alliance, IBM is estimated to have had 83,000 U.S. workers in 2014, down more than 5,000 from its estimate for 2013. U.S. workers fell under 100,000 in 2011 to an estimated 98,000. In 2000, IBM had nearly 154,000 U.S. employees, the company said at that time.
The reduction in works for two consecutive years is the first time IBM has reported such a drop since 1993 and 1994, according to Bloomberg news.
“38,000 resources” affected
In the annual report filed with the SEC, IBM disclosed the lower numbers far inside the lengthy document (page 73), the bulk of which focused on updated financial information and a lengthy narrative about Rometty’s strategy for 2015 and beyond.
Big Blue lists employees as “resources.”
IBM said the work force changes reflect the company’s “shift” to “higher value segments of enterprise IT [information technology.]” More changes are coming, the report added, saying it “continues to remix its skills and resource needs.”
“As a globally integrated enterprise, the company operates in more than 175 countries and is continuing to shift its business to the higher value segments of enterprise IT,” the company said.
“The decrease in total resources from 2013 to 2014 was primarily due to divestitures in 2014, which drove a reduction of approximately 38,000 resources. The company continues to remix its skills and resource needs to match the best opportunities in the marketplace.”
Latest layoff number unknown
Adding to the overall reduction, IBM launched a $500 million “work force rebalancing” plan as 2014 ended, resulting in thousands of layoffs. The exact number is not known since IBM does not disclose such information.
The Alliance@IBM, the Union seeking to represent IBM workers, has reported wide-spread layoffs but does not have a clear number.
IBM stopped making available reports regarding what it calls “resource actions” to affected workers last year. That change, which as WRAL TechWire reported at the time, was entirely legal and was intended as IBM said to protect workers who were not being laid off from being identified through such reports. Alliance disputed that reasoning.
By no longer choosing to disclose such data, IBM deprived the union of its primary tool for calculating the number of layoffs.
However, when the layoffs began last fall an IBM spokesperson acknowledged as many as 10,000 layoffs might be made. In reacting to a report that the technology giant would lay off more than 100,000 the IBM spokesperson told WRAL TechWire that the report was off by a factor of more than 10.
Many more left IBM through sales of groups such as x86, which numbered some 7,000 worldwide with approximately 2,000 of those being located in the Triangle. Lenovo added two buildings to its corporate presence in RTP to absorb the new workers.
In all, sales led to 37,000 people leaving the IBM payroll as well as IBM subsidiaries..
In the filing, IBM noted the new overall total at Big Blue, not subsidiaries, “reflects reduction of approximately 35,000 resources due to divestitures.”
The overall number grew due to changes at IBM subsidiaries.
The reduction in work force is the second consecutive year IBM has reported. According to Bloomberg news service,
In 2013, IBM reduced jobs by some 3,000 or less than 1 percent from 434,246.
Employment at one group of IBM subsidiaries fell in 2014 to 8,862 from 9,018 but increased slightly at another by some 800 to 24,321.
The full filing can be read at: http://www.sec.gov/Archives/edgar/data/51143/000104746915001106/a2222209zex-13.htm