IBM to lay off 10,000, mostly in Europe

May 5, 2005 at 9:35 AM

ARMONK, N.Y., May 5 (UPI) -- IBM plans to dismiss 10,000 to 13,000 workers, mostly in Europe where growth has been particularly slow, it was reported Thursday.

The U.S. computer giant cast the 4 percent staff reduction as part of its previously announced strategy to globalize operations by moving back-office work like accounting and procurement to low-cost sites and cutting staff in high-cost, slow-growth markets like France and Germany.

The company employs about 322,000 people worldwide after 10,000 workers were transferred to Lenovo of China, which this week completed its purchase of IBM's personal computer business, the New York Times reported.

Analysts said the big cutbacks suggest the transition to more profitable businesses and faster-growing markets is not going as smoothly as expected.

"The technology services business has changed, and IBM's operations have to change with that shift," said Laura Conigliaro, an analyst at Goldman Sachs & Co. "As we've seen, IBM has not done a picture-perfect job of it."

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