IBM lay-offs hit Indian employees first... and hard

IBM India, an arm of the 'Big Blue' which is estimated to have a headcount of over 1 lakh employees across multiple locations in the country, is downsizing its Indian staff as part of its global ''rebalancing'' announced by its chief financial officer Martin Schroeter recently.

Indian employees will reportedly be the first casualties as IBM started cutting jobs globally on Wednesday, as it moves out of the hardware business, which has been largely sold to China's Lenovo (See: Lenovo Group to buy IBM's server business for $2.3 billion and IBM seeks buyers for semiconductor unit) 

Poor fourth-quarter results reported last month, marked by a 26-per cent slump in hardware revenue, is considered by experts as the main cause for the layoffs. Worldwide, IBM employs 430,000 lakh people; and reports say some 13,000 jobs are likely to be cut as IBM, once considered almost synonymous with computer technology,  performs the rebalancing act, termed as ''resource action'', which could save about $1 billion in costs.

The number of Indian employees being 'retrenched' – or in simple English, sacked – is estimated between at 700-800, though there is no confirmation on the numbers yet.

Last year's ''workforce rebalancing'' had hit more than 3,300 IBM employees in the US.

IBM India follows a two-tier model of employment, which includes contractual or temporary workforce and permanent staff.

Predictably, most of the employees who have been asked to leave belonged to the former category. The temporary workers are sourced from various agencies and paid higher than the permanent staff, but do not get long term benefits like insurance, provident fund or a severance package.

IBM India has various divisions like IT services, systems and technology group (STG), which is largely the hardware segment, software and domestic market. The largest concentration of its people is in Bangalore.

WralTechWire quoted IBM staffers in Bangalore as saying, ''People broke down after seeing the inhuman treatment. Laptops along with their cases were confiscated, so several employees were seen crying and exiting building carrying and balancing their personal belongings with their two hands.'' Unofficial estimates put the number of employees sacked at around 1,000 in Bangalore alone.

Talk among recruitment experts is that IBM may be targeting up to 2,000 job cuts in India where it employs 1.3 lakh in all.

The worst affected could be the Systems Technology Group where 25 per cent of the hardware division, or a few hundreds of employees, are expected to be axed, following the decision to sell its global low-end x86 server business to Lenovo for $2.3 billion, also entailing transfer of some 7,000 IBM staff to Lenovo.