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IBM Reorg: Up To 13,000 Job Cuts, Mostly in EU

IBM announced late Wednesday a restructuring that will result in layoffs of as many as 13,000 workers, primarily in Europe, and a pre-tax charge of up to $1.7 billion.

The main goal of the reorganization is “to improve the company's efficiencies, strengthen its client-facing operations and capture opportunities in high-growth markets,” according to a corporate statement.

Largely due to slowness in European markets, IBM plans to move employees into more direct client relationship roles and eliminate what it refers to as the “traditional pan-European management layer” that, to this point, has been necessary for coordinating activities across countries’ borders.

“As a result, IBM will create a number of smaller, more flexible local operating units in Europe to increase direct client contact,” according to the company’s statement. “On a worldwide basis, IBM plans to improve the efficiency of its services operations by consolidating much of the service delivery workload into fewer locations by using standard job roles, processes and tools.”

The result for workers will be the elimination of 10,000 to 13,000 jobs, while for shareholders, it will add up to a pre-tax charge during the second quarter of between $1.3 billion and $1.7 billion. Bottom line benefits to the company should begin to accrue during the second half, the company says.

Further details of the restructuring are due to be revealed Thursday morning in a conference call with senior vice president and CFO Mark Loughridge.

About the Author

Stuart J. Johnston has covered technology, especially Microsoft, since February 1988 for InfoWorld, Computerworld, Information Week, and PC World, as well as for Enterprise Developer, XML & Web Services, and .NET magazines.

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