IBM executives Thursday detailed a series of restructuring moves - including the release of between 10,000 and 13,000 employees - aimed at reducing bureaucracy and improving operating efficiency.

Most of the job cuts will come from IBM's European operations, where the company expects to eliminate a layer of upper management and push greater decision-making power to client-facing staff. IBM is getting rid of its traditional pan-European management layer in favor of a number of smaller, more flexible local operating units in Europe that will have more direct client contact, said Mark Loughridge, IBM's senior vice president and chief financial officer, in a call with analysts.

After an extended period of soft economic conditions in European countries, there's a need for IBM to reallocate its resources to meet current demand, Loughridge said. The new operating model, which IBM expects to implement effective July 4, will put more people in client-facing roles and give them the power to make decisions about product pricing, marketing programs and sales support activities, he said. "We refer to this as 'lowering the center of gravity,'" Loughridge said.

The new European operating model also calls for the creation of "centers of excellence" that will consolidate support staff and create standard, repeatable processes. "Some work should be done close to the client, but other work can be done from any location," Loughridge said. "Less hierarchy and streamlined processes will result in cost efficiencies. And integrating back-office functions and creating shared services will help improve productivity as we accelerate the global integration of our operations."

A second major initiative IBM announced pertains to its Global Services business. IBM will work to improve the efficiency of its services operations by standardizing job roles, processes and tools and consolidating service delivery workloads into fewer locations, called "integrated delivery centers," Loughridge said.

"Weak market conditions in some countries, notably in Western Europe, compounded with low levels of attrition have resulted in overcapacity and skills mismatch with market demand," Loughridge said. IBM is working to rebalance is services capacity in local markets - through a combination of staff retraining and reductions - and shift more staff into direct client-facing roles.
 
Overall the cost-cutting plan will result in a pre-tax charge of between $1.3 billion and $1.7 billion in the second quarter, and IBM expects its restructuring actions may yield spending reductions of between $300 million and $500 million in the second half of the year, Loughridge said.