8 ms·

IBM to cut about 3,900 workers while still hiring in ‘higher growth’ areas

115 points by bluedino 4y ago

hulitu 4y ago
I thought companies cut jobs, not people.
SQueeeeeL 4y ago
Ooo, this sounds like a nice recipe for company collapse. You hate to see giants who advanced computing get taken over by MBAs who play that "cost center" and "revenue center" bullshit. I'm sure all their enterprise customers will be understanding of the unfixed bugs when the service agent explains how they made Watson 0.03% more effective at capturing pet names this fiscal year
- myth_drannon 4y ago
  IBM has been a dead company since about late 80's/early 90's.
  - StevePerkins 4y ago
    In terms of developer credibility with the entrepreneurial community? Sure. In terms of being a going concern for large customers and investors? The make billions of dollars of profit per year, have a P/E valuation better than Apple's, and pay out 4-5% dividends annually. I'm not sure what it really means to "be dead" for 40 years. In a sense, the average human is "dead" for 70-something years. But periods of time at that scale are called "life", lol. IBM will be here long after everyone reading this is gone. They aren't relevant to the environments in which most of us work (they're basically a professional services consulting firm), but we aren't everything.
    - aeyes 4y ago
      This only shows that financial engineering works. Paying dividends and buying back shares while taking on billions of debt to finance it isn't a good long-term strategy.
    - onlyrealcuzzo 4y ago
      "Be dead" usually means having a low P/E and little REAL stock price appreciation (that comes with low P/E and high dividends). IBMs stock price was $100 in the 2000s. It's only $133 now. If it adjusted for inflation - that would be $173 today. You lost about 25% in real depreciation to get about ~3% per year yield in dividends (taxed as income $$$). You can do better with Treasuries. So why take the risk on Big Blue? Not uncommon for someone to describe a company like this as "dead" - even if it is, presumably, providing some economic value.
    - myth_drannon 4y ago
      Dead as personal computing company, AI products - bad, blockchain - garbage. It exist as a consulting firm that engages in what I would call shady practises. Everytime I see an article about government contract and IBM it is always portraits IBM in very negative light. So yes, billions of profits which is basically siphoning public tax money to shareholders (well Accenture and Deloitte are not better).
    - lotsofpulp 4y ago
      Their net income has declined precipitously from $15B per year to $5B per year, and profit margins from 15% to below 10%, in a timeframe when its (former) competitors grew by leaps and bounds. https://www.macrotrends.net/stocks/charts/IBM/ibm/net-income https://www.macrotrends.net/stocks/charts/IBM/ibm/net-income >The make billions of dollars of profit per year, have a P/E valuation better than Apple's, and pay out 4-5% dividends annually. For a shareholder, this is little solace when their return compared to the market (a basically risk free rate of return) is negative. 0.64% for the last 10 years, 5.93% for the last 20. SP500 is at 12.4% and 9.8% for the same timeframe, per dqdyj.com total return calculator.
  - pjmlp 4y ago
    Dead companies don't swim in profits and own a major part of Linux projects.
- saltymug76 4y ago
  I'm a developer at IBM for one of their enterprise OSs. The lack of funding in retaining and finding talent is slowly killing an already anemic product. The amount of institutional knowledge that has disappeared over the past decade gives me little hope in it ever recovering. More and more bugs are being marked as 'permanent restriction' as there isn't enough time nor experienced developers to fix them anymore. My department is basically surviving on legacy contracts and customers too scared or lazy to migrate to a modern Linux or Windows infrastructure.
- op00to 4y ago
  uhhh... IBM is a bank masquerading as a technology company and has been since the 1960s when they started getting real fancy with financing. MBAs have been running things at IBM for at least that long if not longer.
- downvoteme1 4y ago
  IBM of today is way past a company that advanced computing. It is a body shop and an American company in name only. Most of their revenue comes from GBS which is basically an offshoring division.
marktangotango 4y ago
I think the notable thing here is; this is really a Redhat layoff since IBM "subsumed" or reverse merged or whatever it was with Redhat. My take is that IBM has been a barely warm carcass for > 20 years already and the Redhat deal did nothing to change that. Here I'm certain that the layoff will be onshore, and the continued hiring will be offshore. That's what they've been doing forever, and their lack of growth and innovation continue to reflect it.
- jehb 4y ago
  I'm no longer there, but I was at Red Hat for three years and change after the acquisition by IBM was first announced. At least through my time there, this couldn't be further from the truth. Red Hat was operated at a completely independent company. I wasn't even allowed to promote IBM products and services because we didn't want to show favoritism over other partners.
  - deleted 4y ago
    [deleted]
- dralley 4y ago
  Red Hat has not done and is not very likely to do layoffs, and is one of the higher growth areas of IBM of which they speak. We did better than most about not over-hiring in the first place.
  - op00to 4y ago
    Expect layoffs in late Feb or March.
- FireBeyond 4y ago
  My area (OpenShift) is seeing no layoffs. Red Hat as a whole improved profitability 10% after adjustments for inflation.
yardie 4y ago
> Chief Executive Arvind Krishna has been trying to pivot Big Blue from its traditional business of infrastructure and information technology services to the fast-growing cloud-computing market. Skating to where the puck has been. While other companies are taking a look at how much they are spending on cloud. It's already a commodified market yet IBM sees itself as the one to grow into it.
- alephnerd 4y ago
  You don't need to be #1 in every category. Having even a 4th place presence can become a 1st place presence if bundled correctly (eg. with IBM Security's managed security portfolio and IBM's professional services team - this gives a much more hand held experience than AWS or GCP, and better for those orgs that are Linux/Unix heavy because Azure won't fit their needs as well from a PS standpoint)
- scottLobster 4y ago
  Given their existing relationships they can leverage and the romanticism finally bleeding out of FAANG's reputations, if they can put together a stable, fundamentally capable platform they could definitely grab a chunk. Toyota has made a multi-decade business model around "skating to where the puck has been". Why can't IBM?
  - alephnerd 4y ago
    Regulatory stuff doesn't really impact Big Tech's Cloud presence. I've been working closely on JWCC related RFPs and the big boys at the DoD are 100% going to push back significantly if AWS or GCP are even slightly inconvenienced. There's an internal recognition with the DoD and DHS that antitrust in the Cloud Platform Security space could lead to national security issues due to turf battles and mismanaged divestments. And people on the Hill trying to make their mark are concentrating more on the Ad Business and Marketplace portions - those are easier wins for consumers and (more critically) small mom and pop businesses that love to participate in local politics.
    - Merrill 4y ago
jstx1 4y ago
> IBM’s current headcount is 260,000, Kavanaugh said. That is about 22,000 lower than the figure disclosed for December 2021. 4000 seems like a tiny number in context of total headcount, and when you take into account that they've somehow lost more than 5 times as many in the past year. > The cuts will focus on workers remaining after spinoffs of the Kyndryl and Watson Health units So the already dead parts of the company? It's almost like they're doing layoffs for the sake of appearances; they aren't really changing anything.
- horsawlarway 4y ago
  > It's almost like they're doing layoffs for the sake of appearances It's almost like you're noticing this because the media is playing up layoff reports in tech. To quote... you - "4000 seems like a tiny number in context of total headcount, and when you take into account that they've somehow lost more than 5 times as many in the past year." They've reduced staff by 5 times this amount over the last 24 months, but this is the reduction that you think is for the sake of appearances... I wonder if that's because this is the one getting media attention...?
  - claytonjy 4y ago
    Another way to think about this is that IBM may be the ones playing up this comparatively-tiny reduction in headcount, because they expect to be rewarded for it (share price up). They would have seen the opposite effect from publicizing the cuts of '22, so they did the cuts but didnt talk about it.
  - time_to_smile 4y ago
    This is a weird take. Are you arguing that we aren't seeing an abnormally high number of layoffs in tech? That this is just "media sensationalism"? Nearly all the layoff reports I've come across I hear about before they're in the mainstream media. Additionally I predicted months ago that we'd be seeing massive layoffs in tech, before the media was talking about it at all. These layoffs are real, are atypical for what we've seen the past decade, and are impacting a large number of real devs. Honestly I haven't even seen the media talking about it until the last few weeks. When I talked about impending tech layoffs back in Oct-Nov nobody outside of the tech community had any idea that there were any issues facing tech. I hardly see how layoffs are being "played up" rather than just being reported.
danrocks 4y ago
Not to be snarky or anything, but a legitimate question: what does IBM actually do? I used to work for a partnering engineering team at <big_corp> and met with dozens of enterprise clients (think Fortune 100) and I never heard anybody ever mention any IBM products. I am really intrigued to understand what keeps this company afloat. My main hypothesis is selling to government and acting more as a holding of acquired companies than anything else. They have 260k employees, for what?
- brazzledazzle 4y ago
  They buy other companies and then drain their life force into IBM like corporate vampires. Once their acquisition is on life support they graft the remains onto their body and look for new victims to consume.
- scottLobster 4y ago
  I'd say legacy mainframe use is a big ticket item. My Fortune 500 company still has IBM mainframes for some internal corporate functions, and I know military/gov still use said mainframes to manage legacy systems. Those contracts can be quite lucrative. But yeah, they do seem to be running on inertia. I've never heard of anyone buying anything IBM for new work.
- alephnerd 4y ago
  Based on my interactions with specific IBM teams: They are a major systems integrator in the financial and govt world, they have a massive professional services team ensuring everything from AIX to RHEL7.2 is running and not breaking for customers, they have very smart HPC and Quantum Chemistry people working on building Quatumn Computing algorithms, they are building features in IBM Cloud for our EU banking counterparts (too big to fail French banks seem to have converged on IBM cloud as their platform of choice), managing a major Docker Hub competitor (Quay), building out and managing the primary on-prem Kubernetes orchestrator (OpenShift), and are managing the primary incident response platform used by enterprises. There are a lot of issues and gripes to have about IBM, but they are a very critical player in the industry. Tech Bros on HN just don't have the visibility and remain in their weird HN echo chamber. And IBM 100% does still have a middle management problem - no way I'd ever work there unless I was at least a VP.
emurillo510 4y ago
costco still uses IBM products.. DB2 ... spufi anyone? I believe some companies like Gap are still using them as point-of-sale as well. It seems IBM has too many employees for the things they do.. I expect more cuts.
beardedman 4y ago
Sure we're going to have a "CEO should take responsibility" comment pretty soon.
low_tech_punk 4y ago
Do people know if IBM Quantum is one of those `higher growth` areas? Asking for a friend who is worried about getting laid off from the Microsoft Azure Quantum team.
softwaredoug 4y ago
> (IBM) delivered an upbeat annual sales forecast while announcing it would eliminate about 1.5% of its global workforce > The cuts will focus on workers remaining after spinoffs of the Kyndryl and Watson Health units and will cost the company about $300 million, he said. IBM still expects to hire in the “higher-growth areas,” Kavanaugh said. > Chief Executive Arvind Krishna has been trying to pivot Big Blue from its traditional business of infrastructure and information technology services to the fast-growing cloud-computing market. Can't help but see all the layoffs as part of a "great refocusing", even with positive news for the company, you can use the fact that everyone is doing layoffs to reorient things. If everyone wasn't doing layoffs, people would worry about the company, and the news wouldn't be buried. Layoffs are just the tool companies suddenly have available to do this with (seemingly) no consequences to them
- ferminaut 4y ago
  IBM would do these layoffs regardless. The whole "everyone else is doing it" is just convenient timing. IBM has lots of dead areas / legacy software & typically those areas are the ones hit hardest.
1970-01-01 4y ago
IBM is all brain and no heart. Been that way for 20+ years.
TrackerFF 4y ago
Don't they just shuffle workers around? I understand if the positions are highly incompatible (marketing staff probably can't transition to OS development), but it the jobs are somewhat similar...
sumoboy 4y ago
IBM has been mismanaged for the past 20 years yet live off legacy products and licensing to keep $$ rolling in. I spent 6 years working for them on the consulting side and it was by far the worst job I'd ever had because management is just terrible. Crippled at every level from incompetence to poor deals being accepted, it's a losing battle career wise. They will target everybody with high pay and any performance issue ever in their past to get rid of people when it's that time. I'd have all kind of conversations with distinguished engineers who gave you some hope that some smart people existed in the company, but it's nothing more than survivor island. They love to buy companies or take over a large companies organization, document it all and outsource all of it. The sales people are really good at finding ways to get new business by overpromising the world to keep them relevant while in the end losing $$.

115 points by bluedino 4y ago

I thought companies cut jobs, not people.

Ooo, this sounds like a nice recipe for company collapse. You hate to see giants who advanced computing get taken over by MBAs who play that "cost center" and "revenue center" bullshit. I'm sure all their enterprise customers will be understanding of the unfixed bugs when the service agent explains how they made Watson 0.03% more effective at capturing pet names this fiscal year

myth_drannon 4y ago
IBM has been a dead company since about late 80's/early 90's.
- StevePerkins 4y ago
  In terms of developer credibility with the entrepreneurial community? Sure. In terms of being a going concern for large customers and investors? The make billions of dollars of profit per year, have a P/E valuation better than Apple's, and pay out 4-5% dividends annually. I'm not sure what it really means to "be dead" for 40 years. In a sense, the average human is "dead" for 70-something years. But periods of time at that scale are called "life", lol. IBM will be here long after everyone reading this is gone. They aren't relevant to the environments in which most of us work (they're basically a professional services consulting firm), but we aren't everything.
  - aeyes 4y ago
    This only shows that financial engineering works. Paying dividends and buying back shares while taking on billions of debt to finance it isn't a good long-term strategy.
  - onlyrealcuzzo 4y ago
    "Be dead" usually means having a low P/E and little REAL stock price appreciation (that comes with low P/E and high dividends). IBMs stock price was $100 in the 2000s. It's only $133 now. If it adjusted for inflation - that would be $173 today. You lost about 25% in real depreciation to get about ~3% per year yield in dividends (taxed as income $$$). You can do better with Treasuries. So why take the risk on Big Blue? Not uncommon for someone to describe a company like this as "dead" - even if it is, presumably, providing some economic value.
  - myth_drannon 4y ago
    Dead as personal computing company, AI products - bad, blockchain - garbage. It exist as a consulting firm that engages in what I would call shady practises. Everytime I see an article about government contract and IBM it is always portraits IBM in very negative light. So yes, billions of profits which is basically siphoning public tax money to shareholders (well Accenture and Deloitte are not better).
  - lotsofpulp 4y ago
    Their net income has declined precipitously from $15B per year to $5B per year, and profit margins from 15% to below 10%, in a timeframe when its (former) competitors grew by leaps and bounds. https://www.macrotrends.net/stocks/charts/IBM/ibm/net-income https://www.macrotrends.net/stocks/charts/IBM/ibm/net-income >The make billions of dollars of profit per year, have a P/E valuation better than Apple's, and pay out 4-5% dividends annually. For a shareholder, this is little solace when their return compared to the market (a basically risk free rate of return) is negative. 0.64% for the last 10 years, 5.93% for the last 20. SP500 is at 12.4% and 9.8% for the same timeframe, per dqdyj.com total return calculator.
- pjmlp 4y ago
  Dead companies don't swim in profits and own a major part of Linux projects.
saltymug76 4y ago
I'm a developer at IBM for one of their enterprise OSs. The lack of funding in retaining and finding talent is slowly killing an already anemic product. The amount of institutional knowledge that has disappeared over the past decade gives me little hope in it ever recovering. More and more bugs are being marked as 'permanent restriction' as there isn't enough time nor experienced developers to fix them anymore. My department is basically surviving on legacy contracts and customers too scared or lazy to migrate to a modern Linux or Windows infrastructure.
op00to 4y ago
uhhh... IBM is a bank masquerading as a technology company and has been since the 1960s when they started getting real fancy with financing. MBAs have been running things at IBM for at least that long if not longer.
downvoteme1 4y ago
IBM of today is way past a company that advanced computing. It is a body shop and an American company in name only. Most of their revenue comes from GBS which is basically an offshoring division.

marktangotango 4y ago

I think the notable thing here is; this is really a Redhat layoff since IBM "subsumed" or reverse merged or whatever it was with Redhat. My take is that IBM has been a barely warm carcass for > 20 years already and the Redhat deal did nothing to change that. Here I'm certain that the layoff will be onshore, and the continued hiring will be offshore. That's what they've been doing forever, and their lack of growth and innovation continue to reflect it.

jehb 4y ago
I'm no longer there, but I was at Red Hat for three years and change after the acquisition by IBM was first announced. At least through my time there, this couldn't be further from the truth. Red Hat was operated at a completely independent company. I wasn't even allowed to promote IBM products and services because we didn't want to show favoritism over other partners.
- deleted 4y ago
  [deleted]
dralley 4y ago
Red Hat has not done and is not very likely to do layoffs, and is one of the higher growth areas of IBM of which they speak. We did better than most about not over-hiring in the first place.
- op00to 4y ago
  Expect layoffs in late Feb or March.
FireBeyond 4y ago
My area (OpenShift) is seeing no layoffs. Red Hat as a whole improved profitability 10% after adjustments for inflation.

yardie 4y ago

> Chief Executive Arvind Krishna has been trying to pivot Big Blue from its traditional business of infrastructure and information technology services to the fast-growing cloud-computing market. Skating to where the puck has been. While other companies are taking a look at how much they are spending on cloud. It's already a commodified market yet IBM sees itself as the one to grow into it.

alephnerd 4y ago
You don't need to be #1 in every category. Having even a 4th place presence can become a 1st place presence if bundled correctly (eg. with IBM Security's managed security portfolio and IBM's professional services team - this gives a much more hand held experience than AWS or GCP, and better for those orgs that are Linux/Unix heavy because Azure won't fit their needs as well from a PS standpoint)
scottLobster 4y ago
Given their existing relationships they can leverage and the romanticism finally bleeding out of FAANG's reputations, if they can put together a stable, fundamentally capable platform they could definitely grab a chunk. Toyota has made a multi-decade business model around "skating to where the puck has been". Why can't IBM?
- alephnerd 4y ago
  Regulatory stuff doesn't really impact Big Tech's Cloud presence. I've been working closely on JWCC related RFPs and the big boys at the DoD are 100% going to push back significantly if AWS or GCP are even slightly inconvenienced. There's an internal recognition with the DoD and DHS that antitrust in the Cloud Platform Security space could lead to national security issues due to turf battles and mismanaged divestments. And people on the Hill trying to make their mark are concentrating more on the Ad Business and Marketplace portions - those are easier wins for consumers and (more critically) small mom and pop businesses that love to participate in local politics.
  - Merrill 4y ago

jstx1 4y ago

> IBM’s current headcount is 260,000, Kavanaugh said. That is about 22,000 lower than the figure disclosed for December 2021. 4000 seems like a tiny number in context of total headcount, and when you take into account that they've somehow lost more than 5 times as many in the past year. > The cuts will focus on workers remaining after spinoffs of the Kyndryl and Watson Health units So the already dead parts of the company? It's almost like they're doing layoffs for the sake of appearances; they aren't really changing anything.

horsawlarway 4y ago
> It's almost like they're doing layoffs for the sake of appearances It's almost like you're noticing this because the media is playing up layoff reports in tech. To quote... you - "4000 seems like a tiny number in context of total headcount, and when you take into account that they've somehow lost more than 5 times as many in the past year." They've reduced staff by 5 times this amount over the last 24 months, but this is the reduction that you think is for the sake of appearances... I wonder if that's because this is the one getting media attention...?
- claytonjy 4y ago
  Another way to think about this is that IBM may be the ones playing up this comparatively-tiny reduction in headcount, because they expect to be rewarded for it (share price up). They would have seen the opposite effect from publicizing the cuts of '22, so they did the cuts but didnt talk about it.
- time_to_smile 4y ago
  This is a weird take. Are you arguing that we aren't seeing an abnormally high number of layoffs in tech? That this is just "media sensationalism"? Nearly all the layoff reports I've come across I hear about before they're in the mainstream media. Additionally I predicted months ago that we'd be seeing massive layoffs in tech, before the media was talking about it at all. These layoffs are real, are atypical for what we've seen the past decade, and are impacting a large number of real devs. Honestly I haven't even seen the media talking about it until the last few weeks. When I talked about impending tech layoffs back in Oct-Nov nobody outside of the tech community had any idea that there were any issues facing tech. I hardly see how layoffs are being "played up" rather than just being reported.

danrocks 4y ago

Not to be snarky or anything, but a legitimate question: what does IBM actually do? I used to work for a partnering engineering team at <big_corp> and met with dozens of enterprise clients (think Fortune 100) and I never heard anybody ever mention any IBM products. I am really intrigued to understand what keeps this company afloat. My main hypothesis is selling to government and acting more as a holding of acquired companies than anything else. They have 260k employees, for what?

brazzledazzle 4y ago
They buy other companies and then drain their life force into IBM like corporate vampires. Once their acquisition is on life support they graft the remains onto their body and look for new victims to consume.
scottLobster 4y ago
I'd say legacy mainframe use is a big ticket item. My Fortune 500 company still has IBM mainframes for some internal corporate functions, and I know military/gov still use said mainframes to manage legacy systems. Those contracts can be quite lucrative. But yeah, they do seem to be running on inertia. I've never heard of anyone buying anything IBM for new work.
alephnerd 4y ago
Based on my interactions with specific IBM teams: They are a major systems integrator in the financial and govt world, they have a massive professional services team ensuring everything from AIX to RHEL7.2 is running and not breaking for customers, they have very smart HPC and Quantum Chemistry people working on building Quatumn Computing algorithms, they are building features in IBM Cloud for our EU banking counterparts (too big to fail French banks seem to have converged on IBM cloud as their platform of choice), managing a major Docker Hub competitor (Quay), building out and managing the primary on-prem Kubernetes orchestrator (OpenShift), and are managing the primary incident response platform used by enterprises. There are a lot of issues and gripes to have about IBM, but they are a very critical player in the industry. Tech Bros on HN just don't have the visibility and remain in their weird HN echo chamber. And IBM 100% does still have a middle management problem - no way I'd ever work there unless I was at least a VP.

emurillo510 4y ago

costco still uses IBM products.. DB2 ... spufi anyone? I believe some companies like Gap are still using them as point-of-sale as well. It seems IBM has too many employees for the things they do.. I expect more cuts.

beardedman 4y ago

Sure we're going to have a "CEO should take responsibility" comment pretty soon.

low_tech_punk 4y ago

Do people know if IBM Quantum is one of those `higher growth` areas? Asking for a friend who is worried about getting laid off from the Microsoft Azure Quantum team.

softwaredoug 4y ago

> (IBM) delivered an upbeat annual sales forecast while announcing it would eliminate about 1.5% of its global workforce > The cuts will focus on workers remaining after spinoffs of the Kyndryl and Watson Health units and will cost the company about $300 million, he said. IBM still expects to hire in the “higher-growth areas,” Kavanaugh said. > Chief Executive Arvind Krishna has been trying to pivot Big Blue from its traditional business of infrastructure and information technology services to the fast-growing cloud-computing market. Can't help but see all the layoffs as part of a "great refocusing", even with positive news for the company, you can use the fact that everyone is doing layoffs to reorient things. If everyone wasn't doing layoffs, people would worry about the company, and the news wouldn't be buried. Layoffs are just the tool companies suddenly have available to do this with (seemingly) no consequences to them

ferminaut 4y ago
IBM would do these layoffs regardless. The whole "everyone else is doing it" is just convenient timing. IBM has lots of dead areas / legacy software & typically those areas are the ones hit hardest.

1970-01-01 4y ago

IBM is all brain and no heart. Been that way for 20+ years.

TrackerFF 4y ago

Don't they just shuffle workers around? I understand if the positions are highly incompatible (marketing staff probably can't transition to OS development), but it the jobs are somewhat similar...

sumoboy 4y ago

IBM has been mismanaged for the past 20 years yet live off legacy products and licensing to keep $$ rolling in. I spent 6 years working for them on the consulting side and it was by far the worst job I'd ever had because management is just terrible. Crippled at every level from incompetence to poor deals being accepted, it's a losing battle career wise. They will target everybody with high pay and any performance issue ever in their past to get rid of people when it's that time. I'd have all kind of conversations with distinguished engineers who gave you some hope that some smart people existed in the company, but it's nothing more than survivor island. They love to buy companies or take over a large companies organization, document it all and outsource all of it. The sales people are really good at finding ways to get new business by overpromising the world to keep them relevant while in the end losing $$.