Analysts squash rumors of 150,000 IBM layoffs

Global Services division reportedly the target, but analysts say layoff rumor inaccurate, ‘ludicrous’

A report by Robert Cringely on the PBS Web site says IBM is planning to lay off 150,000 U.S. workers by the end of this calendar year, but analysts who cover IBM doubt the report is accurate.

One analyst called the rumor “hogwash,” saying IBM’s business is doing well and that the company’s overall number of employees has gone up in the past five years. Another analyst called the report “ludicrous,” saying if the amount of layoffs were accurately reported the company’s entire U.S. operations would be shut down.

According to Cringely, an IBM project called LEAN that resulted in 1,300 layoffs last week was just a prelude to massive job cuts to happen this year at IBM Global Services. Cringely cited unnamed sources within the company who say “they are about to undergo the biggest restructuring of IBM since the Gerstner days, only this time for all the wrong reasons.”

The job cuts are tied to IBM’s growing reliance on outsourcing, the report states.

“LEAN is about offshoring and outsourcing at a rate never seen before at IBM,” Cringely reports. “For two years Big Blue has been ramping up its operations in India and China with what I have been told is the ultimate goal of laying off at least one American worker for every overseas hire. The BIG PLAN is to continue until at least half of Global Services, or about 150,000 workers, have been cut from the U.S. division.”

The layoffs, along with an IBM move to freeze its U.S. pension plan, are designed to raise the price of IBM shares on Wall Street, Cringely says.

IBM spokesman Jeff Couture told Network World he doesn’t expect the company to comment on the report about possible layoffs. “Basically, we don’t comment on what we will or will not do in terms of rumors, which this seems to be,” Couture says.

Analyst Bob Djurdjevic, president of Annex Research, says IBM may be trimming 1,000 jobs here and there to support its outsourcing goals, but there’s no way the company would lay off 150,000 employees. “There’s no business reason for IBM to do that,” Djurdjevic says. “IBM’s business is doing well. They may be trimming here and there but certainly not to that extent. … It’s hogwash. whoever is saying that should find themselves another job.”

Analyst Frank Dzubeck, president of Communications Network Architects, says the layoff rumor “sounds kind of ludicrous since there’s only [about 350,000] people] in the entire company. That means they’d be wiping out every division in the United States including the headquarters, which doesn’t seem plausible.”

Dzubeck says he expects some layoffs and movement of jobs over to Asia, but nothing of the magnitude reported by Cringely. The software division, he says, is growing by leaps and bounds and is actually hiring employees.

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