As International Business Machines Corporation (NYSE:IBM) gets ready to report its fourth quarter results next week, a media report has come in that the company is planning to lay off about 10,000 of its employees of its Global Technology Services (GTS) unit. Although the company has not confirmed the report, IBM layoffs in 2018 would not come as a surprise, as the IT behemoth has been taking such actions over the past few years. Further, these cuts would just be a part of the overall U.S. IT layoffs in 2018 which are expected to continue due to the shift to automation and technology trends like cloud computing. Companies across all sectors are looking at ways to cut their costs, and both increased automation and cloud services promise to do just that.
Like many other IT companies struggling to transform in the digital era, IBM has been trying to restructure itself as the impact of cloud computing on business continues to grow. The IBM job cuts 2018 news report further says that the company has been advised by consulting firm Bain & Company, Inc. regarding these IBM GTS layoffs.
IBM GTS Layoffs
IBM is considering this “resource action” for its employees of the Global Technology Services unit, as the IT services sector continues to come under pressure in the changing technology landscape. In the U.S., this action stands to affect about 1,700 workers. With the company’s focus on new businesses, a legacy unit like GTS, that deals with infrastructure support, shall continue to bear the brunt of these changes.
IBM’s Revenue Declined for 22nd Straight Quarter
As IBM’s quarterly results are due next week, it is important to note that it has been struggling to post revenue growth for the past 22 quarters. Despite its continuous program of reskilling, redeploying, and laying off employees, there is no stopping the trend of IBM revenue decline.
And it shall take some time as IBM prepares itself to be a dominating player in cloud computing and artificial intelligence. The company has been focusing for a while on its “strategic imperatives” of analytics, cloud, mobile and security as its legacy business takes a backseat.
The revenue of the GTS unit has also been on the decline, and with the company’s focus on hiring talent in the areas of artificial intelligence (AI), the cloud, cybersecurity, blockchains, and the like, the future appears to be grim for technology services. In the third quarter, the revenue for technology services and cloud services segment declined by three percent. The IT services market has remained subdued for a while now and other IT consulting companies are also resorting to job cuts. But the process is more painful in the case of IBM layoffs due to its size and global presence.
Will IBM Layoffs Continue?
IBM layoffs in 2018 is not new and would not be the last round of reassessment of its talent pool by the company. However, this continuous process can lower the morale of employees and does not bode well for the business. The latest innovative and cutting-edge products and solutions shall take time before they impact the company’s financial performance significantly. Till then, the trend of IBM layoffs in 2018 is unlikely to stop.
“Black & Blue: IBM hires Bain to cut costs, up productivity“, The Register, January 11, 2018.
“IBM shares up after earnings beat,” CNBC, October 17, 2017.
“IBM reports 2017 Third-Quarter Results,”International Business Machines Corporation, October 17, 2017.