IBM is reportedly cutting around 10,000 jobs across Europe in preparation for the spinoff of its GTS (Global Technology Services) managed legacy infrastructure services unit.
Though not yet confirmed, the cuts are expected to affect approximately 20 percent of its European staff with the UK and Germany set to take the hardest hit, according to a report by Bloomberg. These structural changes are in line with IBM’s shift in focus to a hybrid cloud strategy following its $34bn acquisition of Red Hat back in 2018.
IBM’s customers are changing their buying habits and the firm has seen core revenues declining over several quarters. However, the repeatedly disappointing performance of its legacy business has been offset by a thriving cloud performance, led by Red Hat.
The spinoff, known as “NewCo”, is evidence of IBM’s decision to start moving on from the legacy side of its business, with the new company set to deliver managed infrastructure services and leave IBM free to focus on its open hybrid cloud platform and AI capabilities. But it appears the transition to this new model cannot be achieved without significant redundancies – an unfortunate outcome in the best of times – but no doubt even less welcome under the current circumstances.
In response to a request for comment on the Bloomberg report, IBM said: “Our staffing decisions are made to provide the best support to our customers in adopting an open hybrid cloud platform and AI capabilities. We also continue to make significant investments in training and skills development for IBMers to best meet the needs of our customers.”
The job cuts are estimated to be completed by mid-2021.