Arvind Krishna-led tech giant IBM has joined a host of companies who has started firing employees in the midst of the coronavirus pandemic.
The tech industry has suffered widespread job losses after the pandemic triggered a severe recession.
Hewlett Packard Enterprise, the storage and server firm, said Thursday it would save $1 billion by reducing pay and other costs.
Airbnb Inc and Uber Technologies Inc have also cut about a quarter of their global workforces.
Here is what you need to know:
What did the company say?
“IBM’s work in a highly competitive marketplace requires flexibility to constantly add high-value skills to our workforce. While we always consider the current environment, IBM’s workforce decisions are in the interest of the long-term health of our business,” Ed Barbini, IBM’s spokesperson said in a statement.
“Recognizing the unique and difficult situation this business decision may create for some of our employees, IBM is offering subsidized medical coverage to all affected U.S. employees through June 2021,” Barbini added.
Who will be affected?
IBM, however, did not disclose how many workers are affected but media reports said thousands of employees are set to lose jobs in at least five states of the US.
The cuts affected employees in North Carolina, Pennsylvania, California, Missouri and New York, where IBM is based, Bloomberg reported citing people familiar with the matter.
According to its annual report, IBM had about 352,600 employees worldwide as of December 31. Krishna said in April that more than 95% of them were working remotely.
What has new CEO Arvind Krishna said?
These would be IBM’s first big layoffs under Krishna, who on April 6 replaced outgoing CEO Ginni Rometty. Rometty remains IBM’s executive chairwoman through the end of the year.
Krishna spoke optimistically earlier in May about how the 110-year-old company could weather the pandemic.
“The fact that IBM has been here before gives me perspective and confidence,” Krishna said at the Think conference for IBM clients and developers, held remotely this year.
“I believe history will look back on this as the moment when the digital transformation of business and society suddenly accelerated,” he had said.
However, Krishna had warned investors last month of uncertainty caused by the coronavirus pandemic, saying the company made a “tough decision” to withdraw revenue projections for the rest of 2020.
He had said in April at his first quarterly earnings call as CEO that the company will continue to eliminate software and services that don’t align with IBM’s top two focus areas for growth: cloud computing and artificial intelligence.
How has the company been faring?
The company has suffered years of falling revenue.
The Armonk, New York company reported a 3.4% revenue decline in the January-March quarter from the same time last year, blaming it in part on how the coronavirus outbreak was affecting sales.
In an earnings call in January, IBM discussed reducing costs through “aggressive structural actions” to improve the competitiveness of its Global Technology Services consulting unit, which represents about a third of revenue.
In online forums Thursday, dozens of newly unemployed IBM workers, some who said they had been with the company for more than 20 years, lamented the situation and expressed fear over finding a new job in a recession.
“With the Covid situation, it will be hard to find new opportunities,” one wrote.
(With agency inputs)