IBM laying off thousands, seeking “flexibility” during COVID-19 crisis

A man in an office walks away from his desk carrying a box of knickknacks.
Enlarge / Unlike the illustrative man in this stock photo, employees at HPE, IBM, and other firms conducting layoffs at this time may not even be able to gather their effects from offices closed due to coronavirus.

The COVID-19 crisis is hitting almost every market sector hard, and now the dominos are starting to fall. As other small, medium, and large businesses pare back operations or shutter for good, the tech firms that rely on enterprise clients are themselves taking heavy losses and laying off personnel.

Both Hewlett-Packard Enterprise and IBM this week announced significant cost-cutting measures, including pay cuts and significant job losses.

IBM announced its layoffs late Thursday. In a statement, the company said the “highly competitive marketplace requires flexibility to constantly remix high-value skills,” which in this case means deciding you no longer place a high value on the skills a significant number of employees bring to the socially distanced table.

IBM, like many firms now facing cuts and layoffs, was not in the best of financial situations before COVID-19 hit. The company’s CEO, Arvind Krishna, has been with the company for decades but only stepped into the top seat in April, saying at the time he was focused on building up the parts of the company that support cloud computing and artificial intelligence and was willing to move away from the rest.

IBM did not specify how many positions were being cut, but both The Wall Street Journal and Bloomberg News report thousands of employees were affected in five states: California, New York, North Carolina, Missouri, and Pennsylvania.

Employees, who spoke to Bloomberg on the condition of anonymity, reported entire teams are being cut and mentioned receiving severance packages. IBM said in a statement it would offer subsidized medical coverage to affected employees for the next 12 months.

HPE also announced its cost-cutting plans on Thursday as part of its more recent quarterly earnings report. The company will cut some salaries through at least October 31, with executives seeing pay cuts of 20 to 25 percent. The company, like younger tech brethren such as Facebook and Twitter, says it will further save money by embracing remote work in the longer term, allowing it to shutter some offices.

Although the company expects to conduct layoffs, company leadership did not specify which divisions or how many jobs are at stake. For now, the company said it is “working through the details in the next couple months” to determine what makes sense for the business.

The older, stalwart enterprise firms are not alone. Modern tech upstarts such as Uber and Lyft have laid off thousands of workers in response to cratering consumer demand during the plague year 2020.


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