International Business Machines' (IBM's) local operation, IBM SA, may lay off up to 46 employees across the local business, with a large number of these believed to be from its Systems and Technology Group (STG).
This comes as the company struggles to meet revenue targets amid a drop in demand for products and services and declining sales of the STG business over the past two years.
According to an anonymous source, the 44 personnel currently employed at IBM's STG division were met with a notice of possible retrenchments on Monday morning. Two of the employees at STG, says the source, are contractors and, therefore, excluded from the process.
The notice, in ITWeb's possession, states "up to 46 employees across the company could potentially be affected" by a cost-cutting exercise, following a decision to restructure the operating model for STG.
The reasons given for the possible retrenchments, outlined in the document, are:
* Declining year-on-year sales and revenue.
* Restructuring of the sales coverage model.
* Realignment of technical skills.
Restructuring process
Maurice Blackwood, director of STG at IBM SA, was apparently brought in last year June, and tasked with turning around the floundering division. At the time, employees were notified the unit was not making the requisite numbers and a restructuring process would be undertaken.
In the said notice, issued and signed by Blackwood, he says a restructuring exercise had been embarked on due to declining demand and sales, as well as in response to "changing requirements" in the market and a "reorganisation and realignment" of the skill set of STG employees.
In response to a query around the likelihood of job cuts, IBM SA said: "As reported in our recent earnings announcement, IBM continues to rebalance its workforce to meet the changing requirements of its clients, and to pioneer new, high-value segments of the IT industry.
"To that end, IBM is positioning itself to lead in areas such as cloud, analytics and cognitive computing. IBM is investing in these priority areas. For example, we have recently committed $1 billion to our new Watson unit and $1.2 billion to expand our cloud footprint around the world."
IBM SA did not give a breakdown of employee numbers, saying it was against its policy. The notice of proposed restructuring and possible retrenchments, dated 27 January, however, indicates IBM SA employs 1 383 people.
ITWeb's source says 18 out of the 44 employees from IBM SA's server/STG unit are in the firing line for retrenchments - 41% of the department.
Blackwood says the dismissal process and related staff consultation is likely to be finalised during February. Should any retrenchments be enforced after this process, he says, the 30-day notice of termination will be issued from 21 February.
IBM - the world's biggest technology services company - is a multinational technology and consulting corporation, headquartered in New York and listed on the New York Stock Exchange. It was founded over 100 years ago and has done business in SA for 56 years.
Last week, Reuters reported IBM had missed revenue expectations for the fourth consecutive quarter, as it grappled with weakening demand for its servers and storage equipment, particularly in growth markets.
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