IBM To Cut Thousands Of Jobs, But Will Still Pay Shareholders

IBM is once again swinging the headcount axe on its unfortunate staff, as the tech giant contends with the impact of the global Coronavirus pandemic.

Last month Big Blue posted yet another quarter decline in both profits and revenues, and the firm withdrew its annual forecast as the pandemic slowed software sales.

Long-serving CEO, President and chairman Ginni Rometty, who oversaw the axing of tens of thousands of staff during her tenure, stepped down in early April.

Job losses

Rometty was replaced by former IBM cloud boss Arvind Krishna who has taken over the CEO role.

And it seems that Krishna is continuing IBM’s tradition of regular job culls after it was reported that IBM is once again cutting jobs.

Big Blue is remaining coy about the exact number of jobs it will cut, but reports suggests it could be in the thousands.

IBM confirmed the job losses in a statement to Fox Business.

“IBM’s work in a highly competitive marketplace requires flexibility to constantly remix to high-value skills, and our workforce decisions are made in the long-term interests of our business,” it reportedly said. “Recognizing the unique current conditions, IBM is offering subsidized medical coverage to all affected US employees through June 2021,”

Big Blue reportedly declined to disclose where the cuts would take place, but Bloomberg said the reductions would be spread across at least five states.

Staff in California, Missouri, New York, North Carolina and Pennsylvania are said to be affected.

There is no news over whether the cuts will be include staff on this side of the pond.

Fox Business quoted Krishna as saying earlier this month, that IBM wouldn’t be cutting its 5 percent dividend to shareholders.

Krishna reportedly said it has a secure dividend and financial flexibility, which leaves room for additional acquisitions in the future when they make strategic sense.

“I believe that we actually have enough financial stability, including a secure dividend,” Krishna previously said on Fox Business.” “The dividend is occupying a little bit more than half our free cash flow. It’s not like it’s occupying all of it, and that leaves enough flexibility for us to do it.”

Age discrimination

IBM has got into trouble over its job culling in the past.

In April IBM reportedly settled an age discrimination lawsuit, after it accused of flouting rules by axing mostly older staff and moving jobs overseas (a huge percentage of IBM staffers are now based in India and Bangladesh).

It came after in-depth report by ProPublica and Mother Jones in March 2018 alleged that IBM had a systematic strategy of pushing out IBM staffers aged 40 and upwards, and replacing them with younger, and cheaper employees.

In that report, IBM is alleged to have laid off around 20,000 US employees over 40 years of age over the past five years.

However some IBM watchers believe this number is much higher.

Age discrimination is illegal in the United States thanks to the Employment Act, which became law in 1967.

But proving age discrimination can be difficult, and matters are not helped by it apparently being a fairly common practice in America, as it provides businesses with a smaller salary wage bill and lower benefits outlay.

The ProPublica and Mother Jones report in March 2018 triggered a lawsuit against IBM by Jonathan Langley, who was laid off in 2017 while serving as the worldwide program director and sales lead of IBM’s Bluemix cloud.

Langley has reportedly claimed that IBM laid him off specifically because of his age, then 59, in violation of the Age Discrimination in Employment Act (ADEA).

He had been with IBM for 24 years.

Big Blue is reportedly still facing hundreds of similar age discrimination claims across the United States.

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