VMware lay offs will herald year of mass global IT redundancies says analyst

business cloud network worldCloud driven IT industry convergence will result in 330,000 job losses across the globe in 2016, according to one analyst.

The prediction come from IT market watcher Trip Chowdhry at Delaware based Global Equities Research, following the speculation that VMware is to make 5% of its workforce (around 900 staff) redundant as VMware’s parent company EMC merges with Dell.

The job losses at VMware, according to a report in Fortune magazine, will be a consequence of a restructure of VMware in order to make the merger deal look more advantageous to investors.  VMware is just one of a number of EMC Federation companies, a roster that also includes RSA Security, VCE and Pivotal. There has been criticism, according to Fortune, that Dell’s owner Michael Dell Cynics was potentially getting VMware at a bargain basement price, since its stock was being valued on the basis of the parent company, when its own stock has outperformed EMC shares. The redundancies may help give the investors a better deal as the convergence of the IT giants continues, said the report.

According to analyst Chowdhry this is a pattern that will be repeated throughout 2016, as the boom in cloud computing drives IT industry consolidation. The shift to cloud computing, said Chowdhry, will make much of the IT expertise unnecessary, particularly those who were once needed to support back-end operations. Around 70% of the work done in IT goes on at the back end, Chowdhry told clients in a briefing. As a result, the number of back end staff across the IT industry who face redundancy in 2016 could hit 330,000, he said.

According to Chowdhry’s figures the highest percentage of losses will be at HPE, HP, Yahoo and Yelp, all of which can expect to have to let 30% of their staff go. Losses at the two HP spin off would amount to 72,000 and 86,000 redundancies respectively. IBM, facing 25% staff layoffs in 2016, would put 95,000 IT staff back onto the employment market. Even Cisco, Juniper, Oracle and Microsoft staff would face redundancies, shedding a collective 80,000 staff between them.

The good news, however, is that non back-end IT jobs, involving the other Functional and Customer Domain responsibilities, are to boom. However, Chowdhry warned, these jobs can’t be immediately filled as the education is unable to create the skills in time.