Harsh job cuts in Europe will offset the 19,000 jobs created by the technology company last year.
Interests in the European Union will not be pleased with the massive layoffs announced by Big Blue.
But IBM will see significant savings, between $300 million to $500 million USD for the remainder of this year and almost $1 billion next year.
Great Britain, Germany, Italy, and France will take the brunt of the job loss impact.
IBM cited inefficiencies in client contact and massive layers of bureaucracy as driving the need for change. The company employs over 329,000 people worldwide.
Many of the European job cuts will be voluntary ones, according to IBM. Some cuts will take place in the United States, and those will not be voluntary.
The company considers the countries where cuts will take place to be ones with lower growth in the business. But the cuts will take a little more time to implement than they would in the US, where companies can more easily discard a mostly non-unionized workforce.
According to an economics fellow at the London School of Economics, IBM will have to work with the European Works Councils and discuss its operational changes driving the layoffs.
Said Linda Yueh, “In Europe, people have rights to continue working – in other words, they are more protected and they can’t be fired without a just cause.”
That process of discussion will make the layoff process slower and more costly to IBM. The company has already announced it expects to take a pretax charge of $1.3 billion to $1.7 billion USD in the second quarter.
David Utter is a staff writer for murdok covering technology and business. Email him here.
