IBM has been a company adrift for the last several years with 22 straight quarters of declining revenue. Against that backdrop, The Register published an article yesterday suggesting there could be massive changes afoot for the company’s Global Technology Services group.
Global Technology Services is the business consulting arm of IBM that deals with infrastructure support and hardware consulting. As the company has shifted its emphasis to the cloud, GTS’s hardware focus is an area that will have less significance for the company moving forward.
This change would need to be seen against the changing backdrop of IT in general. The fact is that companies are moving away from running their own data centers and shifting to public cloud services. Having 100,000 employees focused on hardware deployment consulting doesn’t make a lot of sense in this context.
The Register article stated that the division was about to undergo a major change in focus resulting in a huge restructuring of the workforce. Further, the change was so large, the company has hired Bain to help them organize it. Some 30,000 people would be affected worldwide, according to the report.
Of that, 9300 jobs would be moved to areas where IBM is concentrating these days like cloud computing, while around 10,000 positions would simply not be refilled when the employees left. It’s less clear what happens to the remainder from the information in The Register article, but 6000 from cross-company or external services would be moved or eliminated. As for the remaining 5000 or so, it’s not explained what happens to them, or if there would be layoffs involved.
An IBM spokesperson reacting to questions on the accuracy of the article had this to say: “As you know, we do not comment on speculation. Many consultants recommend things to IBM, many of which remain merely recommendations,” the spokesperson told TechCrunch. That’s a carefully worded response to be sure.
The spokesperson went onto to explain, “And like every business, IBM re-skills its workforce to meet emerging client requirements. GTS is substantially increasing its investment in professional development and technical training to focus on our strategic initiatives.” In other words, IBM has been moving to areas like cloud, security, artificial intelligence and analytics over the last several years and they need to move the GTS workforce to those areas too (which would suggest they are actually doing it).
Ray Wang, who is founder and principal analyst at Constellation Research says that this a change the company has to make. “IBM is in the middle of a larger re-skilling exercise. The goal is to redeploy and retrain their staff for new business models,” he said. “GTS was set up for legacy support models and outsourcing models This is why there may be some truth in the rumor, but we do know that Bain is there,” he added.
The good news is that the reports don’t mention massive layoffs, although some layoffs are probably likely with a division this large. Still, if the initial report is correct, the focus appears to be on shifting employees to other positions, not eliminating them. Of course, time will tell how all of this plays out.