Union watches IBM amid reports of impending staff cuts

Union watches IBM amid reports of impending staff cuts

IBM Australia is refusing to comment on speculated layoffs of the global workforce, but the company is under the eye of union officials.

Following weaker than expected results, rumours abound IBM is preparing to cut as much as 10 per cent of staff from its global workforce and various media reports suggest somewhere between 2 and 10 per cent of IBM's global workforce will go in a cost-cutting move.

Speculation regarding staff cuts follow the publication of a transcript of what is reported to be an internal broadcast made by IBM chief executive Sam Palmisano to employees on April 24. According to the transcript Palmisano told staff the company would have to cut costs and "pare back" its operations to correct for a depressed outlook for technology spending.

A spokesperson from IBM Australia refused to comment on speculated job cuts, Palmisano's reported comments or any potential impact on the Australian branch.

However, in the US a source close to the company said the layoffs would affect 2 to 3 per cent of IBM's employees, or between 6400 and 9600 of its 320,000 employees worldwide.

Australian Services Union spokesperson Sally McManus, said the union was keeping an eye on the situation to see how it unfolds.

"There is nervousness amongst the [IBM] staff. They are aware of reports of impending cuts. It's come as a shock to employees as there has always been growth in the company," McManus said.

"The union is keeping an eye on the situation to see how it unfolds."

The reports come after a disappointing quarter, where IBM reported a 32 per cent net income decline from a year earlier. IBM's first-quarter revenue totalled $US18.6 billion, a decrease of 12 per cent compared with the first quarter of 2001.

Until now, IBM generally has avoided the large layoffs that most of its competitors have taken.

IBM watcher and president of Annex Research, Robert Djurdjevic posted a transcript on his Web site. It reads in part: "If you look at the first quarter results of IT companies, it's clear that the industry is not bouncing back this year. We can argue whether it's down again or flat or modestly up. But it's not going back to high single digits or teens. Then project that out in 2003 and you see it's not going to be growing at 10 per cent or 11 per cent next year either."

-- Todd Weiss and Ann Bednarz contributed to this article.

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