On August 26th, multiple media outlets confirmed from IBM China that IBM will completely shut down its research and development department in China, involving over 1000 employees.
Three days ago, employee access permissions were suddenly closed
On August 24th, it was learned from multiple IBM China employees that the company had closed access to IBM China's R&D and testing positions for employees on Friday evening (23rd). A laboratory technician said that before the permission was closed, company employees were commuting normally without any warning or "signal", and some technicians were still working overtime. At present, these employees have been removed from the product group of the communication software and cannot log in to the company intranet through VPN, but they can still access emails.
After only one weekend, the boots fell to the ground.
On the morning of the 26th, Jack Hergenrother, Vice President of IBM Global Enterprise Systems Development, announced at the IBM China Systems Center (CSL) staff meeting that IBM Infrastructure has decided to transfer the research and development work of the China Systems Laboratory to other IBM infrastructure bases overseas, and is currently withdrawing all research and development work from China.
Jack Hergenrother stated that in recent years, China's infrastructure business has declined. IBM has therefore made a difficult decision to relocate its business to other countries closer to its customers based on market opportunities.
According to Interface News, IBM China has multiple subsidiaries, and this adjustment belongs to the IBM China System Center under IBMV, which is mainly responsible for research and development and testing. The employees are distributed in multiple cities across the country, such as Beijing, Shanghai, and Dalian, involving more than 1000 people.
According to a report by First Financial, the closure of the R&D department involves two main business lines: the IBM China Development Center (CDL) and the IBM China Systems Center (CSL), which are primarily responsible for R&D and testing. IBM will provide N+3 compensation to the relevant employees.
According to an IBM China System Center employee, the head of IBM China System Center is currently in communication with IBM headquarters management regarding layoffs and compensation matters. IBM China System Center employees have made some demands for layoffs and compensation, including 2N compensation (N and monthly salary benchmark are not capped), a 6-month buffer period, discounted annual leave, unused paid family leave, stock discount, etc.
Will not affect services in the Greater China region
On the 26th, IBM China stated in a statement to First Financial that "IBM will adjust its operations as needed to provide the best service to customers, and these changes will not affect our ability to provide support to customers in Greater China
IBM also reaffirms its confidence in the Chinese market. At an IBM China Enterprise AI Forum held on August 22nd, Hans Dekkers, General Manager of IBM Asia Pacific, said, "This year marks IBM's 40th year in the Chinese market. We hope to continue to root in China for the next 40 years or even longer
On the same day, Chen Xudong, Chairman and General Manager of IBM Greater China, stated in an interview with First Financial News that the company is optimistic about the growth potential of IBM's AI business in China. At a media briefing in March this year, Chen Xudong announced that the company's strategy for Greater China in 2024 is very clear, which is to tap into key customers, break through new markets, and vigorously expand channels.
But in the past two years, IBM has carried out multiple rounds of layoffs worldwide. In January 2023, IBM announced the layoff of 3900 employees; In the second half of 2023, IBM announced a hiring halt and plans to replace nearly 8000 job positions with artificial intelligence. In March of this year, according to foreign media reports, IBM's target for cutting some departments was as high as 80%.
IBM China has also been affected in the past year. An internal employee stated that CDL had a product line cut last year, and the compensation offered by the company was N+3, with a buffer period of one year. On social media, some employees reported receiving layoff notices in March this year and leaving the company until the end of July.
The latest financial report shows that IBM's total revenue for the second quarter of 2024 was approximately $15.8 billion, an increase of 2%, with a net profit of $1.834 billion, compared to $1.583 billion in the same period last year. Among them, the company's software business (including hybrid cloud platforms and solutions, transaction processing platforms) generated approximately $6.7 billion in revenue, an increase of 7.1%; The consulting business unit (including business transformation, technology consulting, and application business) had a revenue of $5.179 billion in the second quarter, a year-on-year decrease of 0.9%.