Big Blue Partners See Silver Lining In IBM Layoffs

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Reacting to reports IBM has begun laying off as many as 15,000 employees as part of a $1 billion "workforce rebalancing" effort, IBM business partners say Big Blue's loss could be their gain.

IBM solution providers say the job cuts could force the Armonk, N.Y.-based company to rely more on the channel if the company pink slips enough technical and sales specialist that they compete with.

"The more IBM decreases the direct side of its business the more it embraces partners to sell solutions," said Steve Giondomenica, president of CMI (Chouinard and Myhre, Inc) a San Francisco-based IBM partner."That's good for a company like CMI. On the other hand, if IBM's cuts come too close to the bone there could be downside in the field as we typically serve our clients best when we collaborate tightly with IBM’ers in the field."

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Giondomenica and other partners told CRN that if layoffs go too deep they risk disrupting product roadmaps and R&D which could convert upside to downside in the long run.    

IBM confirmed to CRN that it's laying off an undisclosed number of its 431,212 employees. The layoffs have been anticipated since last month, when IBM reported it would take a $1 billion “workforce rebalancing charge” in the first quarter of 2014. But job cut specifics are hard to come by.

In a statement to CRN, IBM spokesperson Doug Shelton said, "We have been very transparent in reporting our intent to restructure. IBM continues to rebalance its workforce to meet the changing requirements of its clients." Shelton declined to share the extent of the layoffs.

Sources tell CRN that the layoffs will disproportionately impact IBM's hardware-centric Systems and Technology Group. CNET is reporting that nearly 25 percent in the Systems and Technology Group is on the chopping block.

IBM reported its revenues dropped from $29.30 billion a year ago to $27.70 billion in its most recent fiscal quarter. That marked the fourth straight quarterly sales decline for the Armonk, N.Y.-based vendor. IBM's System and Technology Group, which sells mainframes, servers, storage and other hardware, saw revenue drop more than 26 percent to $4.26 billion during the quarter.

NEXT: Widespread Reports Of IBM Job Cuts

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