IBM to cut 1500 staff and send jobs offshore
Affected staff said between 1200 and 1500 local jobs are being made redundant this year in several waves. These figures rival the minimum 1200 jobs that Ford announced it would cut when it exits Australia in 2016.
IBM refused to confirm the figure or deny it is sending Australian jobs offshore, saying that for competitive reasons it does not discuss the details of staffing plans. Fairfax Media understands the jobs that are sent offshore would continue to service Australian clients.
Local executives were told of the redundancies in a March teleconference, one source said, ahead of a global restructuring plan announced in April. Executives were told by the company's New York office they needed to cut about 10 per cent of the local workforce this year following disappointing global first-quarter results. The company is estimated to employ between 12,000 and 14,000 staff in Australia.
The redundancies add to communication technology job losses in Australia due to offshoring and cuts by other giants such as HP. Technology workers in banking and other large industries have reported being fired but only after training people in India, China or the Philippines or workers on 457 visas to do their jobs.
IBRS analyst Alan Hansell, who specialises in advising on the outsourcing of IT and the IT skills market, said the cuts mean there will be fewer IT jobs for Australians.
"It's another reason why it's important to review the 457 visa program," Mr Hansell said. "Why bring people in on 457 visas to do IT work when Australian IT jobs are being shed?"
He said the breadth of IBM's services meant the tech giant was "probably finding difficulty in managing them and keeping them profitable".
He said he wouldn't be surprised if New Zealand ended up benefiting the most from the cuts. This was because of the country's cheaper real estate, lower mandatory superannuation and labour rates.
New Zealand also had better English language proficiency than other countries in the region, which he said would help drive productivity when talking with clients.
The restructuring will reportedly cost IBM $US1 billion worldwide. At least 1300 people have been fired in the US, according to employee group Alliance@IBM.
IBM's total global workforce was 434,246 as of December 31. The cuts were estimated by analysts to affect about 2 per cent of its employees, 6000 and 8000 people globally, although Australia appears to have been hit harder.
Frequently Asked Questions about this Article…
According to sources in the article, IBM Australia is axing up to 1,500 local staff this year and sending many roles offshore to Asia and New Zealand as part of a wider reshuffle and global restructuring.
Affected staff said between 1,200 and 1,500 Australian jobs are being made redundant. The company is estimated to employ between 12,000 and 14,000 people in Australia. Globally, IBM had a workforce of 434,246 at Dec 31, and analysts estimated the cuts could affect about 2% of employees (roughly 6,000–8,000), with at least 1,300 fired in the US according to an employee group.
The article links the Australian cuts to a global restructuring announced in April after disappointing global first-quarter results. Local executives were told by IBM’s New York office to cut about 10% of the local workforce this year.
Fairfax Media understood that the jobs sent offshore would continue to service Australian clients, meaning the work would be performed from other countries while still supporting local customers.
The article reports the restructuring will reportedly cost IBM US$1 billion worldwide. Everyday investors should note the one‑off restructuring cost and workforce changes as factors that could influence short‑term results and operational strategy, per the article’s coverage.
IBRS analyst Alan Hansell told the article the cuts mean fewer IT jobs for Australians and argued it’s another reason to review the 457 visa program, questioning why overseas workers are brought in when local IT roles are being shed.
The article quotes an analyst saying New Zealand could benefit the most because of cheaper real estate, lower mandatory superannuation and labour rates, and relatively strong English proficiency compared with other regional options.
Yes. The article notes communication technology job losses in Australia have been driven by offshoring and cuts from other giants such as HP. It also says technology workers in banking and other large industries have reported being fired after training offshore staff or workers on 457 visas to do their jobs.
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