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Leaked IBM email says job cuts are a 'permanent and ongoing' part of its business model

PUBLISHED : Wednesday, 06 July, 2016, 4:46am
UPDATED : Wednesday, 06 July, 2016, 12:08pm

IBM on Monday told workers in the Netherlands to expect a layoff. This is the first time that IBM has ever done a layoff in that country, it said in an email to employees.

Previous changes in the workforce were done via voluntary separation packages.

That internal email that explained the layoff was leaked to the Watching IBM employee watchdog Facebook page and shared with International Business Times UK. 

In it, IBM explains that it needs to rebalance its employee base from workers with aging "redundant" expertise to new areas. 

The email explains:

"In the past IBM implemented successfully voluntary leave programs. This time the number of places we need to rebalance is too large."

IBM isn't new to layoffs, although these are the first to affect the Netherlands. IBM's troubled business units, like its global technology services unit, are shrinking faster than its booming businesses, like its big data/analytics, machine learning (aka Watson), and digital advertising agency are growing.

But there was a particular sentence in this email that was enlightening. In it, IBM all but admitted that its current method of shifting workers is not temporary, but the new norm:

"Our customers have a need for new insights, knowledge and capabilities, making the existing expertise redundant. That is why the optimisation of our workforce is a permanent and ongoing part of our business model."

All told, IBM eliminated and gained jobs in about equal numbers last year, it said. It added about 70,000 jobs, CEO Rometty said, and cut about that number, too.

IBM does not disclose the number of people or jobs impacted by any particular layoff, and the Netherlands layoff is no exception. It also doesn't announce its layoff plans. But IBM does talk about the financial impact of layoffs to Wall Street analysts every quarter.

For instance, in April, when it reported Q1 2016, CFO Martin Schroeter said that IBM thinks it could end 2016 with roughly the same number of people as it had at the beginning of the year, 380,000. IBM says it's looking to hire 25,000 people right now, with skills in the new fast growing areas.

An IBM spokesperson says:

"The news from the Netherlands is part of the changes to the company we articulated during first quarter earnings. At the time, we did state that we are transforming the company to lead in a new era of cognitive and cloud computing. To this end, IBM currently has more than 25,000 open positions, many in these key skills areas. If IBM meets its hiring goals, we expect to end the year with the same number or more employees than at year-end 2015."

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