headhunters are targeting ibm's laid-off employees! where is the "blue giant"'s chinese business heading?
2024-08-31
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recently, as ibm china's r&d department announced a comprehensive layoff, headhunters from some local technology companies began to take action, and how the "blue giant" will develop its business in china in the future has also attracted widespread attention in the industry.
according to the first financial daily reporter, this round of layoffs involves thousands of r&d personnel. ibm currently still has more than 10,000 employees in china, but this is half of the number of nearly 20,000 in its heyday. ibm refused to disclose the number of its chinese employees.
according to an internally reprinted meeting minutes, ibm held a 3-minute conference call on the day of announcing this round of layoffs. jack hergenrother, vice president of ibm global enterprise system development, said that ibm infrastructure decided to transfer development tasks from the china system laboratory to other ibm infrastructure bases overseas.
"we are exiting all development assignments in china," he said. "ibm infrastructure continues to transform to help unlock the full value our organization has to offer and help us achieve sustainable business in a challenging global market."
the shift was influenced by market dynamics and intense competition, said hergenrother, who acknowledged that infrastructure business in china has declined in recent years.
he mentioned ibm z, which is ibm's most important mainframe business and an important part of ibm's hybrid cloud strategy. the adjustment of ibm's business strategy in china is directly affected by the demand for ibm z mainframes; in terms of storage, ibm is consolidating development work to fewer locations to cope with fierce competition.
danny mace, vice president of ibm storage engineering, said the strategic realignment was necessary to support ibm's global customer and business strategy.
according to the meeting minutes, ibm z and ibm storage are two key business areas of ibm in china. a former ibm employee told the first financial reporter that ibm z and storage previously had a large business volume in china.
however, in recent years, ibm's revenue and profit margins in china have dropped significantly. the company's 2023 financial report shows that its revenue in the chinese market fell by nearly 20% year-on-year.
an ibm insider told the first financial reporter that despite the layoffs of thousands of r&d personnel, the above two businesses still exist in china, and sales and services are not affected. "ibm z can still be sold, but large state-owned enterprises will no longer purchase it," he said.
according to the first financial reporter, the previous generation of ibm z large servers and software are still deployed in many banks and other financial institutions in china. the maintenance of these devices will continue to be retained, but there will be no further updates.
many people are concerned about what other businesses ibm has in china? a person familiar with ibm told the first financial reporter: "ibm's enterprise consulting services have become one of the most important business departments in china. in addition, there is also a part of software and a part of hardware maintenance, but the scale is definitely not comparable to the previous one." in addition, ibm's unix server business has also been given to inspur.
last august, ibm launched watsonx, a generative ai and data platform, to the chinese market. according to the reporter, this is the company's main software platform product. just last week at ibm's enterprise ai summit, turing new intelligent computing, a domestic intelligent computing service provider, announced the adoption of three major functional components of ibm watsonx. turing new intelligent computing chairman and ceo explained to the first financial reporter that watsonx is simply a variety of toolkits.
ibm did not disclose the specific scale of its enterprise consulting business in china, but chen kedian, president of ibm consulting greater china, told the first financial reporter that he is optimistic about the overseas demand of chinese companies. "going overseas has become a very clear direction for chinese companies." he said, "whether it is shein or tiktok, they are doing very well abroad. ibm's consulting business is spread across five continents around the world."
many former ibm employees have expressed regret over the company's current situation. a former ibm vice president said that ibm had 20,000 employees in china in the past few years, but the number of employees has dropped to about half in recent years.
in the view of alain benichou, former ceo of ibm greater china, the reduction in the number of employees is also related to the successive splitting of ibm's businesses in the past few years. in october 2020, ibm split the infrastructure management services business of global technology services (gts) and established kyndryl. "so the number of employees is definitely not comparable to that year," alain benichou told reporters.
an ibm employee told reporters: "ibm has long been a staunch supporter of the chinese market and has invested heavily in it. today's decision is also a helpless one."
ibm is known as the "huangpu military academy" in the technology industry and is also the "first job" for many technology practitioners. many employees who have left the company in recent years have become entrepreneurs or joined local technology companies and become "trendsetters" in the field of ai.
yicai global learned that after this round of layoffs, headhunters from chinese technology companies have begun recruiting talent, especially for positions related to artificial intelligence and cloud computing. an entrepreneur who resigned from ibm told yicai global: "a lot of old colleagues lost their jobs this time, and many of them want to join our company."
however, when asked whether they would consider poaching people from ibm, some local technology companies told reporters: "hiring people may increase costs, so we need to be cautious."
(this article comes from china business network)
