IBM confirms global restructuring plans

5 May 2005

IBM has confirmed that it is to implement a series of restructuring actions that could see it axe between 10,000 and 13,000 jobs worldwide. It is believed that if the company’s 3,700 workers in Mulhuddart, Dublin, are to be affected it is likely that they will be offered redeployment rather than outright redundancy.

As reported in yesterday, there had been mounting speculation that the computer giant would axe 10,000 jobs globally following disappointing results from what is traditionally the tech industry’s rock-steady player. On 14 April, the company’s first quarter profits came to US$1.41bn, 5pc less than what Wall Street expected. Revenues were US$22.9bn, also below expectations.

In a statement last night the company estimated that it will record a pre-tax charge of between US$1.3bn and US$1.7bn in the second quarter due to the restructuring, with the first benefits of the plan being realised in the second half of the year.

The company described the restructuring actions as designed to improve efficiencies, strengthen client-facing operations and capture opportunities in high-growth markets, such as business performance transformation services (BPTS).

In a statement the company said: “The company plans to realign its operations and organisational structure in Europe to improve the speed of execution and better meet the needs of its clients. The success of this strategy will depend on reducing bureaucracy and infrastructure in lower-growth countries and creating teams that can work across country borders, shifting more employees into direct client roles that support the company’s plans to deliver higher-value services and products.

“This eliminates the need for a traditional pan-European management layer to co-ordinate activity. As a result, IBM will create a number of smaller, more flexible local operating units in Europe to increase direct client contact.”

The company said the restructuring actions include voluntary and involuntary workforce reductions of between 10,000 and 13,000 employees worldwide. “The majority of the overall workforce reductions are planned for Europe and the company has initiated discussions of these changes with local consultation bodies,” IBM said in a statement.

Some 3,700 people are employed by IBM in Mulhuddart in a variety of roles ranging from software and hardware design to manufacturing and logistics as well as customer support. It has been suggested that at least 120 of these jobs will be affected by the restructure, with those affected being offered redeployment rather than redundancy.

By John Kennedy