International Business Machines—better known as IBM—started letting go of United States employees in an effort to recreate itself globally, according Bloomberg citing a source with knowledge of the company’s plans. The announcement about the company’s goal for worldwide reconstruction came back in April.
The move is affecting all levels within the company from low-on-the-totem-pole employees to top executives, said the source.
Lee Conrad of Allicance@IBM said some employees were told about the cuts from Tuesday night. The reconstruction could hand the company a global expense of $1 billion which will involve severance pay.
IBM’s announcement came after the company saw a profit of $3 a share in the first quarter, lower than the expert-predicted $3.05. This was the first time IBM’s earnings had not reached the predicted amount. IBM said after the report came out the focus of the cuts would be outside of the U.S. and would be mostly done by June 30.
Due to the $1 billion dollars in estimated reduction expenses the IMB is probably letting about 6,000 to 8,000 individuals go, said Oracle Investment Research analyst Laurence Balter. This would amount to less than two percent of the company’s 434,246-person workforce. (This was the number as of December.)
According to the Alliance@IBM, IBM let go 121 workers from its Systems and Technology group. This section of the company saw a decrease in revenue by 17 percent.
“Change is constant in the technology industry and transformation is an essential feature of our business model,” the top computer company said in a statement today without going into great detail on the cuts. “Consequently, some level of workforce remix is a constant requirement for our business. Given the competitive nature of our industry, we do not publicly discuss the details of staffing plans.”
The $1 billion for reconstruction is up from the $803 million spent in 2012 and the $440 million in 2011.
In addition to its regular staff, IBM has been decreasing the amount its uses contract employees as well. According to memo retrieved by Bloomberg, CDI told its employees who work for IMB to decrease their May hours.
