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IBM Downplays Channel Impact Amid Reported 100,000 Layoffs

**Editor’s Note: Click here for a recap of layoffs impacting some of the biggest names doing business in the indirect channel.**

IBM has yet to tell Wall Street that it’s laying off a reported 26 percent of its workforce, or 100,000 people, throughout the United States, Canada and Australia.

As of 5:45 p.m. Eastern on Thursday, Big Blue still had not filed a current report with the SEC about the activity. But word got out this week that the cuts are in progress, after various media predicted in recent days that Big Blue soon would chop a large number of workers from its rolls. In fact, the Communications Workers of America site, Alliance@IBM, is the go-to spot as now-former IBMers share anecdotes about losing their jobs.

The mass layoffs come after IBM on Jan. 20 showed a drop in sales for the 11th consecutive quarter. Even though IBM has been divesting low-margin holdings as it tries to shore up its standing in cloud software and services, it has not done as well as it had hoped. Indeed, it’s not the only long-established company facing that dilemma as “born in the cloud” firms prove more nimble and innovative.

“IBM as well as other tech stalwarts such as Oracle, SAP, HP and Cisco face major headwinds as they adjust to this new cloud paradigm shift,” Daniel Ives, an analyst at FBR Capital Markets, told Fortune.

Despite the cuts, IBM says it is "committed to supporting both clients and channel partners to ensure its continuing business momentum."IBM, of course, is framing the situation with a more positive spin. Here’s the full statement from a spokesman, with a nod to the channel:

“At a time when IBM is aggressively transforming, the company continues to rebalance its workforce to meet the changing requirements of its clients and to lead in new, high-value segments of the IT industry, including cloud, analytics, mobile, security, social and cognitive computing.

Transformation on this scale requires IBM to continually remix skills – our clients expect no less as they look to IBM to help them take advantage of these innovations and new technologies. In our rapidly changing services business, we are taking actions to deliver the innovations our clients need, while balancing efficiency, quality and cost.

In some areas of the business, this means realigning our teams to improve service levels, enhance productivity and keep clients well-positioned for the future. In all cases, we’re committed to supporting both clients and channel partners to ensure our continuing business momentum.

We continue to hire and develop key skills in the U.S. and global workforce. In fact, we currently have approximately 15,000 open positions, nearly half of which support the growing areas of our business.”

Channel Partners has inquiries out to some key analysts for input on how IBM’s latest round of layoffs stands to impact MSPs, VARs and other partners. Meantime, another IBM spokesperson said, “We do not expect any disruptions to our current Business Partner operations.”

The cuts are part of what’s rumored to be a larger corporate reorganization. And one top exec already has stepped down. This is the last week at IBM for Lance Crosby, founder, CEO and general manager of SoftLayer, the cloud company IBM bought for about $2 billion in 2013. According to industry rumor, Crosby is leaving as IBM chose to put Robert LeBlanc, a 34-year IBM veteran, in charge of the cloud business unit.

Layoffs also are common in the first few months of a new year. Many companies shed workers after a previous year, or even just a fourth quarter, of poor performance.


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