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Leader: Why would IBM make layoffs?
Company still setting industry standard, so what's going on?

By silicon.com

Published: Tuesday 03 May 2005

IBM looks set to lay off around 15,000 workers in Europe, with the UK and Ireland affected particularly harshly.

The news broke just as the weekend - a long weekend for many across the continent - kicked in, meaning all but the weekend business pages went with the story, which isn't completely confirmed at this time.

Must be that IBM Global Services isn't doing all that well. Think again. It now accounts for almost half of quarterly revenues ($11.7bn of $22.9bn in a Q1 report on 14 April) and has been the big success of the past six years or so.

Is it doing poorly versus the competition? IBM GS remains one of the top IT services outfits, in fact one of the top business consultancies full stop. EDS is still a big boy but Accenture and IBM GS have set the standard for the rest of a cutthroat services industry in recent years.

In fact, one IT director this publication spoke to last week put his finger on a swing towards the big guys. Smaller consultancies are losing out to offshore providers while big international services providers have the wherewithal to weather or tap that trend.

A flat PC business was sold off to the Chinese - a deal that coincidentally went through today - but at Global Services again we're faced with a situation where even though things are going well for a vendor, profits could be a little bit juicier. Shareholders are good at sniffing out such things.

Let's not pretend this is anything other than routine. Big companies do it all the time and the proportion of the workforce now in the spotlight is tiny when set against the size of the 300,000-plus total workforce.

But in the UK and Ireland, a lot of people will be affected. (That's partly testament to how much expertise IBM bases in these places, we should add.)

And this is - ironically at a time of relative economic prosperity - another story about redundancies during a general election campaign, highlighting the fact that in broad areas of technology, whether cars (MG Rover), telecoms equipment (Marconi) or IT services, there are no guarantees.