IBM warns Global Tech Services staff that 346 UK heads will roll in latest redundancy action

IBM has revealed that hundreds of UK staff working in the Global Technology Services division will be in line for the chop under the latest wave of redundancy action.

The first meeting of the staff-nominated Employee Consultation Committee (ECC) was held on 25 November and Big Blue confirmed that 346 IBMers working for GTS locally will be leaving their post next year.

Rather than pushing them out of the door itself, IBM first wants to see how many people are willing to leave voluntarily.

"Following the first Employee Consultation Committee meeting... we are now launching a Voluntary Separation Programme. The programme is open to all in-scope UK IBM regular employees working in GTS Infrastructure Services in the UK," IBM stated in a staff memo seen by us.

Those who joined IBM via TUPE or are to do so "during the duration of this project, and have an active retention period" will "not be eligible for voluntary or involuntary redundancy".

IBM said the offer for anyone agreeing to leap includes:

• An ex-gratia payment equivalent to six months' salary, inclusive of any statutory redundancy payment due. A notice period of 12 weeks or contractual notice (whichever is longest).
• Notice periods to be worked. Any portion of the notice period which exceeds 13 weeks may be paid in lieu. Potential to pay additional pension contribution from ex-gratia payment.

Additional allowances such as overtime, incentives, bonuses, and other payments are not included in the formula IBM is using to calculate payments, it said.

The ECC document revealed the rationale for the latest redundancy programme, the second this year in GTS, saying that to address reducing revenues and improve competitiveness, IBM needs to restructure the business unit.

"Infrastructure Services continues to need more direct and appropriately skilled client-facing employees, with a further shift of focus from indirect and above market roles to client centric new business growth within the market."

It added that the "current economic and business circumstances have accelerated the need to act fast to improve IBM's competitiveness, given that client requirements and their anticipated spending patterns have changed."

Further, the market for classic Infrastructure Services is "uncertain", said IBM, and the company anticipates the same being the case for 2021.

"In order to remain competitive, we consider that we must take action now to change the way we are structured by reducing our IS UK workforce, to focus on strategic revenue growth while protecting profit margin. GTS propose to achieve this through automation, realising efficiencies in our organisational model through Agile Accelerate and streamlining our workforce in line with skill requirements.

"As a result, we are proposing to reduce the number of employees of GTS IS in the UK by 346 employees. We propose to offer voluntary redundancy. Involuntary redundancies may be required."

The number of staff at risk, or in scope, within GTS is 1,346.

Earlier this year, IBM swung the axe on GTS (under a redundancy programme codenamed Project Palm) and 236 out of 1,244 people in scope left. IBM had wanted to find enough willing participants to go but ended up forcing people out. The formal closure of that programme was 19 October, just weeks before the current one was first flagged.

"I have every confidence that 3 weeks was sufficient time for our crack management to assess the impact of the previous redundancies and realise that we needed to do more. I'm sure it's in the Agile manifesto that they use to wipe their arses," one GTS employee told us.

In order to remain competitive, we consider that we must take action now... by reducing our IS UK workforce, to focus on strategic revenue growth while protecting profit margin. GTS propose to achieve this through automation, realising efficiencies in our organisational model through Agile Accelerate

GTS has been hit hard by the shift to the cloud and IBM is not alone in this respect. Others like DXC have been facing their own challenges in an outsourcing landscape where big-ticket deals are harder to come by. Revenue at GTS has been declining for years and IBM has clipped the workforce repeatedly to maintain profit.

The longer term plan for GTS became clearer in October when IBM confirmed it is spinning off the division into a separately traded public vehicle by the end of next year. One respected Wall Street analyst, Bernstein, has estimated that up to 20 per cent of GTS could be at risk based on the $2.3bn structural action IBM is taking in this quarter.

However, due to the impact of COVID-19 on its business, IBM is also trying to cut costs in other areas, including Global Business Services, Systems, and even Cloud and Cognitive Software, the latter being seen as the Crown Jewels. These actions are being taken across Europe.

IBM told The Reg: "Our workforce decisions are made to best support our clients on their journey to adopting an open hybrid cloud platform and AI capability, and we are reinvesting in our business. We continue to make significant investments in education and skills development for IBMers to better meet our clients' needs." ®