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IBM and SAP plan layoffs
IBM Corp and SAP joined a growing group of technology behemoths to lay off thousands of employees in recent months amid global economic uncertainty.
While German software giant SAP confirmed plans to cut 3,000 jobs, or 2.5 per cent of its global workforce in a bid to cut costs, agencies reported that New York-based computing giant IBM would reduce some 3,900 jobs, slightly more than one per cent of its staff.
An IBM spokesman refused to shed light on how the layoffs would affect its Indian operations. A SAP spokeswoman asked for more time to share details of how the move would affect its Indian arm.
Tech giants gained from a boom in online spending and remote work during the pandemic-induced lockdowns and invested heavily in expansion. Their growth slowed when people went back to their old ways after the worst of the pandemic, forcing their leaders to find ways to slash costs.
“This is primarily a normalisation of the workforce happening right now due to the large-scale hiring that happened last year. Reduced gross margin, higher indirect costs, and lower earnings led to cost-cutting and people reduction,” said Vijay Sivaram, CEO, Quess IT Staffing.
Some of these layoffs are also the result of the failure of newer projects. “In the wave of digital, large tech companies recognised the need for multiple revenue layers and hence pivoted into new projects and incubated large amounts of technology engineers.
Those revenue streams didn’t come to light, putting further pressure on margins,” Sivaram said.
Layoffs at Google’s parent Alphabet, Microsoft, Amazon and IBM combined have eliminated about 44,000 positions so far this year, Bloomberg reported. The tech sector announced 97,171 job cuts in 2022, versus 12,975 in the previous year, according to consulting firm Challenger, Gray & Christmas.
“Companies like IBM had over-hired to keep up with the digital transformation needs of the rest of the industries,” said Achyut Menon, a global hiring expert, who has partnered with recruitment firms hiring for IBM. “With the digital spends of the corresponding year not keeping pace, most service companies have become conscious of the margins.” DeccanHerald
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