By Azania Patel
Tech firms IBM and SAP have today both announced mass layoffs set to affect over 6,000 jobs, joining the tech downturn of 2023.
IBM Corp, an American multinational technology corporation, today announced 3,900 layoffs after missing its annual cash target while European tech firm SAP said it planned to cut 3,000 staff.
IBM’s missed cash target along with the layoffs resulted in a two per cent fall in its share value in extended trading.
The company’s software and consulting business growth witnessed a downtrend in the fourth quarter contributing to the missed cash target.
A company spokesperson for IBM said the company remained “committed to hiring for client-facing research and development”, but said the need to trim IBM’s workforce was made necessary by the company’s negative cash flow.
SAP, an European multinational software company has made similar cuts. The software giant said it needed to focus on core business and announced workforce cuts of 2.5 per cent.
Over 3,000 people have been impacted by this announcement.
In an attempt to boost profits, the company also said it was exploring selling its 71 per cent stake in Qualtrics, a software subsidiary.
The Germany-headquartered firm expects adjusted operating profit for 2023 to rise to over £8bn at constant currencies, according to a statement.
In a press call, SAP chief executive officer Christian Klein said the the job cuts were a strategic move and “not related to our business momentum”.
A SAP spokesperson said the workforce cuts were for “the purpose of the reorganization and to refocus on SAP’s largest business, its cloud service offerings”.
Job cuts at IBM and SAP are the latest in the list of large scale tech layoffs. Alphabet (Google’s parent company), Microsoft and Amazon have all announced job cuts this month.
According to consulting firm Challenger, Gray & Christmas, tech layoffs are up by nearly 649 per cent, with an estimated 97,171 job cuts.
Alexia Pedersen, VP of EMEA at O’Reilly, told City A.M . the sectors’ trends did not necessarily mirror ground reality in UK.
“Redundancies are not made lightly. Organisations are considering several factors and deciding to reduce costs given the current economic uncertainty, with forecasted numbers showing a reduced demand for services and products.”
“Some tech companies will want to take a cautious view and prepare for what may lie ahead by reducing costs, but the situation in the UK isn’t necessarily mirroring the global trend,” Pedersen commented.
However, Dominic Harvey, director at CWJobs, told City A.M . that the sector’s uncertainty was going to also cause anxiety for people not directly affected: “Tech workers are showing signs of uncertainty around job security – likely triggered by what they are reading in the news and on social media. So, employers need to go the extra mile to reassure them and build a strong sense of security in their current role and long-term career prospects. This could be key to attracting and retaining much-needed talent over the coming months and years.”
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