Botch Job: IBM India Layoff Shows Red Days Ahead

Ever since the dotcom bubble burst in the beginning of this century, news of mass layoffs doesn’t cause much flutter and has been relegated to the background. Aviation industry went through this phase a few years ago. Still, what is currently happening at IBM is anything to go by, the company that had earlier seen some great growth will be facing tough times in the future. And this may not be an isolated case.

The Internet is spewing news about the layoff that happened at the STG (Systems and Technology Group) of IBM’s Bangalore office. The employees were called in for a meeting and were told to hand over their laptops, collect their personal stuff and leave the premises in two hours. Reports say that the employees left the premises in a highly emotional and vulnerable state and some were making unsuccessful attempts to fight back tears.

Some of the employees who took to social networking sites vented their ire, saying they were treated in an inhuman manner. In one such Twitter posting, Solidarity4IBMinIndia aptly voiced the anger and shock: You treated Indians like resource widgets. These people are human beings. About 40% of the staff members at STG in Bangalore lost their jobs in a single day this week. And the downsizing operation turned IBM into a slaughter house of sorts, at least on social media. Of course, on its part, IBM has handed out the severance package, which is six weeks’ full salary.

Experts are warning about more job cuts in India, Brazil and the Netherlands in what is termed as ‘resource action’ by the IBM. However, this cut-and-exit practice is not so prevalent among multinational companies operating in India, as it is in the developed countries.

Over the past few months, industry pundits have been warning us of the tougher days ahead of IBM, with the company setting itself a target of earning $20 per share by 2015, despite the recent drop of 5% in revenues posted in December 2013. IBM plans to cut more jobs across the spectrum and across the countries in an extended operation. In fact, analysts have been forecasting the number of job cuts to be anywhere around 13,000-15,000.

Although India, Brazil and the Netherlands are the first among the list of countries where job cuts are happening, IBM is reportedly planning a massive drive and may eliminate as many as 13,000 jobs across the globe. The US may witness this phase at its IBM offices towards the end of February, as per media reports.

Things did not augur well from January (2014) onwards when IBM agreed to sell its low-end server business to Lenovo. This clearly indicated reduced requirements for professionals who were directly or indirectly connected with that group. Consequently, people in tech and engineering research roles had to leave, as well as those who were holding soft jobs. Employees who were really up the ladder were also asked to leave because of this ‘changed scenario.’

Although homegrown tech biggies have announced salary hikes and continued hiring as usual, IBM’s mass layoff has sent the job market into a tizzy. India’s $118,000 billion IT services industry is projected to grow at 13-15% in the next fiscal, according to NASSCOM. But IBM, which employs approximately 100,000 workers in India, clearly has a different story to tell.

Although things do look quite bleak right now, hiring consultants have been rejoicing like never before. Their mailboxes must be overflowing with résumés even now and more will turn up in the days to come. When talent is available for less, they will surely want to make hay while the sun shines.