Category Archives: redundancies

Fresh redundancies illustrate IBM’s continuing cloud challenge

IBMWithin the last twelve months, the company has inducted more than 70,000 IBMers and spent more on acquisitions than in any other 12-month period in its history. Focusing on data analytics, security, machine learning and mobile, the business is attracting a new breed of employee to its ranks. All would seem well until you consult social media.

The Facebook group, Watching IBM, has increased its following by more than 66% over the last week. The group has taken responsibility for bringing light to the 70,000 job losses experienced by the firm in the past few months. Comments such as “At the beginning of 2015 our department had 25 people in it. At the beginning of 2016 our department has 13 in it,” highlight the decline.

For all the positive news of expansion, new product offerings, and 70,000 new employees, the headcount over the course of the twelve month period has shrunk around 1% to 377,757 from 379,592.

With company revenues declining for fifteen consecutive quarters, this should not come as a great surprise for most; IBM’s struggles to re-invent itself as a cloud business have been well documented over recent years.

Back in January, Clive Longbottom, Service Director at Quocirca commented that IBM could risk being left behind, should the transition take too long. With AWS, Microsoft and Google continuing to surge forward, that risk is continuing to grow, though the consultancy skills nurtured in IBM will remain in demand “I still believe that IBM will remain a major force in the IT world, it just has to make sure it positions and messages itself effectively to its existing customers and to its prospects”

Last week IBM released a report which highlighted that two- thirds of organizations implementing hybrid cloud are gaining competitive advantage from their hybrid environments are nearly three times as likely to use it to assemble data assets or monetize data.

Surveying more than 500 hybrid cloud implementers, in 26 countries worldwide, the report highlighted that 85 percent of respondent commented that a hybrid approach to cloud is accelerating the digital transformation in their organization. During 2015 Q4, total cloud revenues (public, private and hybrid) for the vendor increased 43% to $10.2 billion, though revenues throughout the business were down 9% to $22.1 billion in the same period for 2014.

Despite some negative press, and a surge in social media activity being directed towards the tech giant, it seems the workforce transition is far from complete. “We’ve been shifting resources aggressively,” CFO Martin Schroeter commented last week “and we’d like to shift them more aggressively.”

Citrix to axe 1000 staff and spin off GoTo amid shareholder pressure

CitrixCitrix is to decimate its workforce and spin off its GoTo product into a separate listed company as it seeks $200m savings and a return to its most profitable basics.

The loss of 1000 jobs, thought to be sanctioned under pressure from the activist hedge fund manager Elliott Management, represents 10% of the company’s workforce.

In July BCN reported that Citrix was considering its options for the future of its GoTo range of networking systems, which includes videoconferencing and the popular desktop sharing service GoToMeeting. At the time, Elliott Management, a 7% stakeholder in Citrix, made no secret of its wish to see the company spin off any non-core assets, slim down the product portfolio and cut costs dramatically to yield higher rates of growth.

In an operational review released on November 17th, the company said it would stop investing in certain programmes and products and shut down non-core products. The company said it expects about $200 million in annualized pre-tax cost savings, 75% of which is likely to be in 2016. The job cuts do not include the impact of the spinoff, according to Citrix. The job cuts will cost between $65 million and $85 million in the fourth quarter of 2015 and fiscal 2016 with most of the restructuring would be done in November and in January, Citrix disclosed.

The Go To business, which is valued at $3.5 billion to $4 billion (according to FBR Capital Markets analysis) could be sold as a separate business unit.

In a statement, Citrix said it plans to ‘increase emphasis and resources’ to its core enterprise products, including XenApp, XenDesktop, XenMobile, ShareFile and NetScaler. It has previously been reported that Elliott suggested that Citrix to explore the sale of NetScaler, a system that speeds up cloud based applications.

“We are simplifying our product, marketing, sales, operations and development,” said interim Citrix CEO Bob Calderoni, “Focusing on core strengths and simplifying how we work will improve execution, drive higher profit and begin growth in areas in which we provide the greatest value.”

Analyst Clive Longbottom at Quocirca said Citrix has become becalmed and can’t propel itself to the next level it needs to reach.

“It has a decent position as the main virtual desktop vendor, but with a new CEO and pressure from investors, Citrix has to do something,” said Longbottom.

However GoTo in combination with other technology such as ShareFile could have created the means for a massively scalable information platform, said Longbottom.

“There is one possibility around all this – a possible acquisition by another organisation. If Microsoft acquired a company that it has supported for so long, it would gain a platform for full desktop computing in Azure,” said Longbottom.

Hewlett-Packard to decimate its workforce as major split announced

HPHewlett-Packard is to cut 10 per cent of its workforce, which could mean up to 30,000 redundancies, as plans to divide the company in two unfold.

The losses will come when Hewlett Packard Enterprise (HPE) splits from the printer and PC business. The jobs cull will cost $2.7bn to carry out but will save the same amount in running costs every year, says HP.

The new structure proposed by chief executive Meg Whitman would steer HP Enterprise’s focus onto enterprises and government agencies while the PC and printing divisions would concentrate primarily on the consumer market.

Details have not been released about where the job cuts will be made, but Whitman told Wall Street analysts that the plan involves changing the nature of the workforce. The proportion of workers in what HPE calls ‘low-cost locations’ is expected to rise from today’s figure of around 42 per cent to to 60 per cent by 2018.

“We’ve done a significant amount of work over the past few years to take costs out and simplify processes,” Meg Whitman told a meeting of shareholders and Wall Street analysts, “these final actions will eliminate the need for any future corporate restructuring.”

Since the height of the dot com boom in 2000 Hewlett Packard’s stock has lost 60 per cent of its value. However, Hewlett-Packard remains one of the world’s largest technology companies, with revenues this year expected to top $50bn.

Earlier this year HP cut 55,000 jobs. These will not be the last of the job cuts, predicted Charles King, analyst at the Silicon Valley IT consulting firm Pund-IT. “The number is sadly larger than some people might have expected, but I think it’s a reflection of how much trouble HP has been having with its services,” said King.