IBM Australia to cut 1500 jobs

02:36, Jun 20 2013

IBM is declining to comment on a report it may axe between 1200 and 1500 jobs in Australia and move a significant chunk of the work they were doing to New Zealand.

The Sydney Morning Herald reported IBM Australia was in the midst of axing up to 1500 Australian staff in a reshuffle that would send many jobs "offshore" to Asia and New Zealand, quoting undisclosed sources.

An IBM spokesman responded that "change is constant in the technology industry and transformation is an essential feature of our business model".

"Consequently, some level of work-force remix is a constant requirement for our business. Given the competitive nature of our industry, we do not publicly discuss the details of staffing plans," the spokesman said.

Alan Hansell, an analyst with Sydney-based information technology researcher IBRS, told the SMH he wouldn't be surprised if New Zealand ended up benefiting the most from the cuts.

That was because of the country's "cheaper real estate, lower mandatory superannuation and labour rates", he said.

New Zealand also had better English-language proficiency than other countries in the region, which would help drive productivity when talking with clients, he said.

IBM is believed to employ between 12,000 and 14,000 staff in Australia and more than 1000 in New Zealand.

The company has already been shifting some international work to New Zealand.

In February, Prime Minister John Key opened an IBM development centre on Unitec's Mt Albert campus in Auckland, where the company is employing 120 students part-time, developing and supporting software for Australia's Westpac Bank.

IBM and Unitec signalled then that they expected the new facility would employ 400 full and part-time staff by February 2015.


Affected staff said between 1200 and 1500 local jobs are being made redundant this year in several waves. These figures rival the minimum 1200 jobs that Ford announced it would cut when it exits Australia in 2016.

IBRS' Hansell, who specialises in advising on the outsourcing of IT and the IT skills market, said the cuts mean there will be fewer IT jobs for Australians.

He said the breadth of IBM's services meant the tech giant was "probably finding difficulty in managing them and keeping them profitable".

The restructuring will reportedly cost IBM US$1 billion ($1.3 billion) worldwide. At least 1300 people have been fired in the US, according to employee group Alliance@IBM.

Australian executives were told of the redundancies in a March teleconference, one source said, ahead of a global restructuring plan announced in April. Executives were told by the company's New York office they needed to cut about 10 per cent of the local workforce this year following disappointing global first-quarter results. 

The redundancies add to communication technology job losses in Australia due to offshoring and cuts by other giants such as HP. Technology workers in banking and other large industries have reported being fired but only after training people in India, China or the Philippines or workers on visas called 457 visas to do their jobs.

IBM's total global workforce was 434,246 as of December 31. The cuts were estimated by analysts to affect about 2 per cent of its employees, 6000 and 8000 people globally, although Australia appears to have been hit harder.


Fairfax Media