A Forbes magazine report has claimed IBM is preparing to cut 26% of its workforce, in a reorganisation project with the code name Project Chrome. IBM is dismissing the report.
IBM will be laying off some of its staff, as disclosed in its latest earning report last week. However, the number of staff cuts will be a small fraction of what Forbes reported.
In the Forbes’ report, columnist Robert Cringely says, “to fix its business problems and speed up its “transformation,” next week about 26% of IBM’s employees will be getting phone calls from their managers. A few hours later a package will appear on their doorsteps with all the paperwork.
“Project Chrome will hit many of the worldwide services operations. The USA will be hit hard, but so will other locations. IBM’s contractors can expect regular furloughs in 2015.
“One in four IBMers reading this column will probably start looking for a new job next week. Those employees will all be gone by the end of February.”
In his article, Cringley says Project Chrome appears to be a pure ‘accounting resource action’, driven by executives and designed to make IBM’s financials look better for the next few quarters.
IBM hit back against Cringely’s article, calling it stupid, and strongly suggesting Cringely’s numbers were inaccurate. “An industry gadfly is trying to make noise about how IBM is about to lay off 26% of its workforce,” the company says in a blog post. “That’s over 100,000 people, which is totally ludicrous.”
It adds, “the fact is, IBM already announced, after 3Q earnings report, that the company would take a $600 million charge for restructuring. That’s several thousand people. Not 10,000, or 100,000.”
IBM said it had 431,212 employees at the end of 2013, slightly down from 434,246 employees in 2012. The company has not yet disclosed its overall employee headcount for the end of 2014.
IBM says it currently has job postings for more than 10,000 professionals worldwide, with more than half of them in growth areas such as cloud, analytics, security and mobile technologies.
The blog post insists IBM is still making huge profts - $21 billion in operating pre-tax profit last year. “We have high growth in a substantial portion of the portfolio, and those areas (CAMSS) have better-than-normal margins in areas that matter most to clients today — that’s the heart of the IBM transformation.”
Cringely says the reorganisation will ‘traumatise’ IBM and put most of its accounts into crisis.
“With fewer people and changing roles, things IBM has contractual obligations to do for its customers will start to be overlooked,” he writes.