IBM to cut thousands more jobs, union says

IBM plans to cut up to 5,000 more US jobs as the company moves to maintain profit in the economic downturn by moving work to India.

IBM plans to cut up to 5,000 more US jobs as the company moves to maintain profit in the economic downturn by moving work to India.

So far this year, IBM has laid off about 4,600 employees, including workers in its software unit and sales department.

The latest round of expected job cuts could start taking place today, according to Lee Conrad, national co-ordinator of unofficial employee union Alliance@IBM.

Some 1,674 jobs have been cut in IBM's application services division according to the union's website. A further 4,000 US jobs are expected to go in the first half of this year.

Offshore workers accounted for 71% of IBM's nearly 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.

The move will also lower labour costs and enable IBM to compete more easily with Indian outsourcing companies. In January, IBM reported $4.42bn in quarterly profit.

At the same time as cutting labour costs, IBM is seeking new sources of revenue and is negotiating to buy Sun Microsystems for an estimated $6.5bn.

Analysts have said that considering IBM Global Services probably manages more Sun equipment than anybody else, it would make sense for IBM to control the future of its products.

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