Human Capital & Careers

Return of the Job Cuts

Led by IBM, companies resume their slashing ways.
Stephen TaubMarch 27, 2009

After six weeks of steady declines in the pace of large layoff announcements, last week brought a reversal of the trend, with some of the biggest names in business paring their workforces.

IBM, which earns roughly $1 billion in profits every month, confirmed earlier media reports that it plans to cut about 5,000 U.S. jobs, and that many of them will be moved to India. Some employees are expected to find other positions within IBM, the company said.

BusinessWeek noted that only 29% of IBM’s workforce is in the United States, down from 35% in 2006.

Google, meanwhile, reported on its Website plans to cut nearly 200 sales and marketing jobs, which could be interpreted as a message that the company does not expect the economy to turn around soon.

However, Omid Kordestani, Google’s senior vice president of global sales and business development, said the cutback is a natural result of the company’s rapid growth over a relatively short period of time. “When companies grow that quickly it’s almost impossible to get everything right — and we certainly didn’t,” said Kordestani. “In some areas, we created overlapping organizations which not only duplicate effort but also complicate the decision-making process. That makes our teams less effective and efficient than they should be. In addition, we overinvested in some areas in preparation for the growth trends we were experiencing at the time.”

Elsewhere, Agilent Technologies said it will cut 2,700 jobs, with fiscal 2009 revenues for its electronic measurement segment expected to be down roughly 30% from 2008 to the lowest level in the company’s 10-year history. Revenue in the semiconductor & board test segment is expected to be down more than 50% from last year and 65% from its peak volume.

“We have been very aggressive to date in addressing the downturn in electronic measurement markets,” said Bill Sullivan, Agilent president and CEO. “However, business remains severely depressed, and there are no prospects for a meaningful recovery in the foreseeable future.”

Hospira Inc., a specialty pharmaceutical company, said it plans to reduce its global workforce by about 10%, or 1,450 jobs, mostly during the next 12 months. “By reducing costs and improving efficiencies, we can free up more dollars to invest for profitable growth and shareholder returns,” said Christopher Begley, chairman and CEO.

Schlumberger, the world’s largest oilfield-services company, will cut another 5% of its workforce, CEO Andrew Gould said at an industry conference, according to a Reuters report. The company cut 5% of its 87,000 workers in the first quarter.

Johnson Controls announced a restructuring plan that will result in an estimated pretax charge of $200 million–$215 million in its 2009 second quarter. It did not specify how many jobs will be affected, but said the goal is to further align its cost structure with global automotive-market conditions.

Several smaller companies announced job cuts as well. For example, Legg Mason Inc.’s western asset management unit eliminated about 100 jobs, or 10% of its workforce, according to Bloomberg. And Lionbridge Technologies is cutting 325 jobs.


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