IBM plans to cut 10,000 jobs from its European services unit to minimize costs before they spin off the division in 2021, according to Bloomberg report released today. The job cuts will affect about 20% of IBM staff in the region, with offices in the U.K. and Germany facing the biggest cuts. Offices in Belgium, Poland, Slovakia, and Italy will also be affected.
Bloomberg’s report about the cuts also says that IBM announced the job cuts in early November while meeting with labor representatives.
IBM has neither confirmed nor denied the report’s details. The company said that its staffing decisions are made to give the best support to customers in adopting an open hybrid cloud platform driven by AI.
Change is inevitable
In October, IBM announced that it is planning to spin off its $19 billion infrastructure service unit into a separate company before the end of 2021. Arvind Krishna, the CEO of IBM, said that the spinoff plan would free up more resources and allow the company to focus on higher-margin and higher-growth hybrid cloud business.
Krishna said that IBM has always changed itself to adapt to the times and serve the clients better from one tech era to the next.
He continued to say that it is the through-line that connects all of the essential moments that mark the company’s rich history.
IBM plans to endure
Dave Vellante, the chief analyst at the research firm Wikibon, says that IBM’s decisions make both financial and strategic sense. IBM is shedding lower-margin, nonstrategic operations to streamline the business and chart a consistent growth trajectory.
IBM has been on the path, marked by its x86 server and microelectronics ventures.
The shift from legacy systems to hybrid models with the cloud is primarily driven by its acquisition of Red Hat Inc in July 2019, which brought the best technology to allow this change.