Layoffs have hit the global technology industry hard. Software giants IBM and SAP are the latest companies to join the layoffs wave. The two companies plan to sack thousands of employees as a cost-cutting measure owing to the dwindling macroeconomic trends. The development comes at a time when big technology giants such as Google-parent Alphabet, Microsoft and Amazon among others have announced mass layoffs.
In a statement on Wednesday, IBM Corp announced that it has sacked as many as 3,900 employees of its global workforce across its Kyndryl business and its Watson Health units, which is the company’s artificial intelligence segment, as part of its disinvestment strategy. The company attributed its decision of laying off employees to its failing to achieve its annual cash target and revenue expectations in the fourth quarter of last year. In 2022, the company's cash flow stood at $9.3 billion, which was below its target of $10 billion.
James Kavanaugh, the chief financial officer of IBM Corp, said in a statement that the company is "committed to hire for client-facing research and development."
Meanwhile, German software giant SAP will slash 3,000 jobs, or 2.5% of its global workforce, as the company looks to cut costs and instead focus on its cloud business. "We expect only a moderate cost-saving impact for 2023, and a more pronounced one in 2024, about 300 million euros to 350 million in run rate savings as of 2024," Luka Mucic, the CFO of SAP said in a statement.
SAP is also planning to sell its remaining stake in Qualtrics, which the company bought in 2018 for an amount of $8 billion. SAP took Qualtrics public in 2021, at a valuation of $21 billion. "(The sale) would result in a quite significant one-time gain. This would materially increase the profit performance of SAP, but it's currently not reflected in the outlook," Mucic said.
SAP's decision to lay off employees comes after the company reported a 30% surge in its cloud business in the fourth quarter.
On Thursday, Finnish elevator maker Kone announced the sacking of as many as 1,000 employees, or 1.6% of its 63,227 workforce, as part of its cost-cutting strategy. The company expects the demand to pick up in China, which is its main market as well as in its other Asian and Middle Eastern markets. Through the layoffs, the company is planning to save 100 million euros annually from the beginning of next year.
Despite the company reporting a surge in its operating profit by 1.6% to $398 million year-on-year (YoY), the company’s sales have taken a slump. Henrik Ehrnrooth, the CEO of Kobe said in a statement, “In China, we expect markets to start to recover towards the end of the first half as a result of the broad stimulus measures that have already been announced.”
Last week, Microsoft laid off 10,000 employees, or about of its global workforce by the third fiscal quarter of 2023, whereas Google will be slashing 6% of its total workforce or around 12,000 jobs globally across its engineering, product, corporate and recruiting verticals. Earlier this month, Amazon announced layoffs of over 18,000 workers, starting January 18, 2023.
Social media behemoth Meta last year sacked 11,000 employees or 13% of its workforce last year. Microblogging platform Twitter, which is now owned by Tesla CEO Elon Musk, sacked 50% of its workforce and is planning to slash its workforce further. Snap, the parent company of the social media platform Snapchat, sacked 20% of its staff. HP Inc. also said it is planning to axe 4,000-6,000 jobs by the end of fiscal 2025 as the computer maker looks to cut costs by reducing its global headcount. Software major Salesforce fired around 1,000 employees due to the economic downturn.
Leave a Comment
Your email address will not be published. Required field are marked*