IBM’s retrenchment of 2 000 employees can be viewed as refinement by a company that has been struggling for the past decade, an analyst said today.
The New York-based firm confirmed to media on Friday that the 2 000 employees to be retrenched represent only 1% of its global workforce. It is not yet clear if any IBM South Africa staff would lose their jobs, as the company is yet to comment on the matter.
On Friday, IBM Global confirmed in a statement that a “small percentage of employees” who are not performing “at a competitive level” would be leaving the company.
Further, the IBM statement read: “We are continuing to re-position our team to align with our focus on the high value segments of the IT market – while aggressively hiring in critical new areas that deliver value for our clients and IBM."
IBM has previously shed jobs for two consecutive years.
The first job losses were in 2016 when the company was shifting its focus towards cloud computing; the following year, 2017, the jobs bloodbath continued at IBM with more jobs being cut.
One analyst says the job losses are a continuation of a process IBM began a decade ago.
Senior equity analyst at Cape Town-based Mergence Investment Managers, Peter Takaendesa, says: “The job layoffs can be viewed as a way of refining a process IBM started a decade ago. The journey of shifting from hardware to software a decade ago has had challenges. Software services require less resources than hardware and also automation keeps going, also affecting jobs.”
Takaendesa also points out that competition has severely affected IBM’s performance as new entrants had performed better.
“The smaller guys (SMEs) have also given IBM strong competition; they came into the market smaller but they have done better in terms of services offering,” he says.
IBM has for years been viewed by analysts as lagging behind the overall technology sector. It went for six years declining in sales until 2018 when it grew revenue by a meagre 1%.
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