IBM wields axe on EMEA staff

IBM is cutting jobs across its European offices as part of a shakeup of its Europe, Middle East & Africa (EMEA) corporate structure.

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By  Peter Branton Published  May 8, 2005

IBM is cutting jobs across its European offices as part of a shakeup of its Europe, Middle East & Africa (EMEA) corporate structure. However, staff employed by IBM Middle East should escape the axe, the company claimed. “The restructuring will be in specific areas and specific geographies, we are not going to be impacted by that,” said Takreem El-Tohamy, general manager, IBM Middle East, Egypt & Pakistan. “What they [IBM in Europe] are doing is grouping countries together, moving headquarters from one place to another, consolidating headquarters together and so on. This means they have to get rid of some people,” he explained. Asked if there would be job losses at IBM Middle East, which is headquartered in Dubai Internet City (DIC), El-Tohamy replied “No, not as far as I know.” IBM last week confirmed that it it is reorganising its EMEA operations, in a bid to create a flatter management structure. Between 10,000 and 13,000 jobs are expected to be cut. Although speculation regarding job cuts abounds, Fred P. McNeese, a director at IBM EMEA, confirmed El-Tohamy’s stance on potential local job losses in the Middle East. “We do not expect any changes in the staffing of our Mideast operations,” he said. Fears have grown that IBM is going to cut jobs since it announced last month that its first quarter financial results had missed expectations. Mark Loughbridge, IBM’s chief financial officer, said that the company was looking at actions which “may require some sizable restructuring activities” to help move decision making closer to the customer (see IT Weekly, 30 April - 6 May 2005). IBM has informed staff likely to be affected by the planned job cuts and has offered redundancy terms that amount to two weeks’ pay for every year of service. The computer giant saw poor sales performance in some of its key markets, including France, Germany, Italy and Japan, in the quarter. Analyst firm Gartner Group highlighted problems in the company’s Global Services business unit, with a drop in short-term service signings. “This is especially problematic because IBM Global Services must maintain a large number of consultants even when work is not available,” it warned. According to a report in Business Week, IBM is looking at shifting hundreds of tech services jobs from Western Europe to lower-cost countries, such as Hungary. Staff have already held a protest demonstration outside IBM’s German headquarters in Stuttgart over any such move. “From what I’ve seen there were some problems with slowdown, and not closing deals on time, but here in the Middle East I would say we have done very well [in services],” said El-Tohamy. IBM Middle East is seeing double-digit growth in its business services operations, he claimed. Last week’s news that IBM has completed the sale of its PC business to Chinese firm Lenovo may also lead to further job losses in Europe. Around 600 IBM staff at its plant at Greenock, Scotland, have been transferred to Lenovo, with others fearing for their jobs.

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