IBM confirms job cuts


IBM confirms job cuts

Warwick Ashford

IBM has confirmed that it is laying off staff but gave no details of the job cuts, after reports that the company plans to move up to 5,000 US jobs to India.

"This is a North American action. We are not communicating locations or the number of jobs as a result of this action," IBM said in a statement.

IBM continues to build on its estimated 80,000-strong workforce in India and other locations while reducing the number of workers based in the US, according to unofficial union Alliance@IBM.

Figures posted on the union's website show that in 2009 IBM plans to hire almost 19,000 people in India, more than 13,000 in Asia/Pacific and over 7,000 in Latin America.

So far this year, IBM has laid off 4,600 North American employees. The number of jobs lost could be as high as 10,000 after this latest round of cuts, according to union estimates.

Offshore workers accounted for 71% of IBM's 400,000 employees at the start of the year, up from about 65% in 2006, according to The Wall Street Journal.

The union has criticised IBM for taking jobs away from the US, but analysts said the strategy will help IBM win overseas contracts and maintain healthy profits in its services business.

Offshoring is an inevitable result of a globalised economy and the financial pressures companies are facing due to the economic downturn, analysts have said.

Moving jobs to India will lower labour costs and enable IBM to compete more easily with Indian outsourcing companies.

IBM intends to come out the economic crisis fighting fit. As well as cutting costs to maintain profits, IBM is seeking new sources of revenue through strategic acquisitions.

The company is believed to be on the shortlist of companies interested in buying troubled Indian IT supplier Satyam and in negotiations to buy Sun Microsystems in the US.

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