IBM plans to cut up to 13,000 jobs, mainly in Europe, to cut its costs as part of an ongoing restructuring of the company following poor financial results.
The substantial job cuts, predicted by Computer Weekly this week (3 May 2005), will cost IBM up to $1.7bn (£944m) to implement, and will result in IBM taking a charge in its second quarter results.
IBM said it expects the cuts will start to reduce its operating costs from the second half of this year.
IBM has not produced details of where the cuts will take place, but the UK is one of its biggest European markets and has one of the largest headcounts in the region.
Big Blue made cuts in its IT services business in Germany earlier this year, and in its recent first quarter report IBM said it was struggling to clinch deals in the IT services market, partly as a result of cheaper competition from outsourcing companies in India.
IBM said the cuts would be through both voluntary and enforced redundancies.
The company also said it planned to slim down its European management structure, which includes taking out a pan-European management organisation to allow the business to focus on smaller focused business units. The top 50 IBM executives recently said they would take a pay freeze until the performance of the company improved.
IBM has just completed the sale of its PC business to China’s Lenovo for $1.25bn (£694m).