IBM prepares to axe regional staff

COMPUTER giant IBM is set to dismantle its European, Middle East and Africa (EMEA) corporate structure as part of a company-wide reorganisation. The move is expected to take its toll on hundreds of the company’s regional managers.

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By  Peter Branton and Rhys Jones Published  May 8, 2005

COMPUTER giant IBM is set to dismantle its European, Middle East and Africa (EMEA) corporate structure as part of a company-wide reorganisation. The move is expected to take its toll on hundreds of the company’s regional managers. The job losses are in response to mounting shareholder pressure over rising costs and a sharply falling share price. The main IBM business affected is its Global Services division, which runs implementation projects and consulting services. “As we decide how we will move forward, we will interact with employees and employee representatives as required to discuss the proposals we are considering,” said Fred McNeese, director, IBM, EMEA. The scale of the losses, expected to leave 15,000 jobless — some 5% of IBM’s 325,000 workforce — means that some compulsory redundancies are seen as inevitable. All the staff affected by the changes are to be found new jobs or made redundant. “The restructuring will be in specific areas and specific geographies, we are not impacted by that,” said Takreem El-Tohamy, general manager, IBM Middle East, Egypt and Pakistan. “What [IBM’s Global] is doing is grouping countries together, moving headquarters from one place to another, consolidating headquarters together … so they have to get rid of some people,” he said. IBM told staff of the planned job cuts in a conference call last week and presented them with outline redundancy terms that amount to two weeks’ pay for every year of service. Employees had until last Friday to opt for voluntary redundancy. “IBM is looking at evolving client needs and making changes in the way we operate so that we can meet those needs in the most efficient and productive manner possible — including re-examining our operations and organisational structure around the world,” explained McNeese. “Our country management teams are focused on the opportunities presented by their local marketplace and requirements of their local clients,” he added. The scope of the restructuring and the dismantling of IBM’s EMEA regional operation has not taken analysts by surprise. “We will see more of this type of move as the larger vendors move away from a geographical focus (EMEA) and move to a more strategic market focus,” said Todd McGregor, regional vice president of analyst firm Gartner. “IBM knows where the lucrative markets are and will hone all of their energy into extracting as much revenue from those targeted accounts,” he added. “We can assume that the Middle East will be a non-strategic market for IBM from now on,” said McGregor. “But it is still an important market and there is enough investment in terms of history and people. Perhaps we will see a deepening of the Gulf Business Machines-style relationship where they are the prime representative and IBM will take more of an oversight role of the operations in the region,” he added.

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