When you don’t know which departments will be hit with a layoff, look at the revenue-light or money-losing divisions.
Such is the case with IBM, which disclosed in April that it expected to take a $1 billion restructuring charge during the second quarter. The company began cutting jobs earlier this week, to the tune of 2,286 as of Thursday night, according to Alliance@IBM, a website run by the CWA Local 1701, an IBM employees’ union. Here’s a look at its report:
So far, IBM’s Software Group Marketing has lost 222 workers. In its first quarter earnings report, the company noted that the group’s overall revenues were flat from the year-ago period at $5.6 billion. Meanwhile, the group’s Information Management area shed 137 jobs following a 2 percent year-on-year decline. The STG Storage Systems Development organization cut 121 jobs as the Systems and Technology segment posted a 17 percent revenue drop.
When IBM unveiled its layoff plans, it said most of the cuts would be overseas and expected the layoffs to be largely completed by the end of June, according to Bloomberg. Overall, some 6,000 to 8,000 employees are said to be affected.
Trimming and Chopping
It’s a logical strategy to focus cuts in areas that are weak in terms of revenues or profits. For example, earlier this year Lockheed cut several hundred workers from its Information Systems & Global Solutions division, an area the defense contractor expected to face declining revenues for the remainder of 2013.
“Those two areas are obviously targets, but the technology marketplace is so competitive right now that organizations could use this time to upgrade talent through a restructuring,” says David Chie, president of Palo Alto Staffing. “For example, if they have good developers in one department that they are going to shut down, they might look for weak developers in a different department and lay them off, moving the good developers into other teams.”
Contractors also tend to be cut first when layoffs begin, says Jon Holman, founder of IT executive search firm The Holman Group.
“Companies that lay off employees also lay off contractors. In fact, in many cases, they lay off contractors first,” says Holman, adding, “As a sweeping generalization, contractors in the STEM professions are more expensive than employees, even though the contractors often don’t get benefits. What contractors provide is flexibility and ease of hiring skill sets that may not be available easily in full time employees. They also help with temporary projects where full-time employees don’t make sense…When the economy turns down, the proportion of jobs filled by temporary employees also goes down.”
Apparently, contractors may want to take a peek at the IBM layoff playbook, too