IBM's shrinking revenues

After promising a statement about local job cuts on Monday, computer giant and stalwart of the financial computing landscape IBM has now gone to ground.

The company is restructuring internationally as it attempts to reverse three years of shrinking revenues, with reports that thousands of jobs are on the line as it seeks to cut costs and boost profits.

In January, Forbes suggested that 110,000 jobs were on the line - over a quarter of the company's global workforce. IBM denied that, but has again declined to say exactly how many will lose their jobs here or abroad.

Asked to comment on speculation that emerged from the highly respected IEEE (the peak professional body for the technology sector worldwide) that as many as 400 Australian jobs could be on the line, an IBM spokeswoman on Monday said that the company would issue a statement that afternoon. But yesterday it U-turned, acknowledging that no statement would be made.

IBM remains a major supplier to the financial services sector in Australia. NAB is probably its biggest client, having signed a long term contract in 2010 which saw IBM take over ownership and operation of the bank's data centre computer systems, and also employ 450 NAB staff who were offered roles in IBM.

IBM's lack of transparency on the job cuts makes it impossible to say how many of those people may be at risk in this latest round of cuts.

The other major banks are also IBM customers: the Commonwealth Bank's much vaunted core banking system runs on IBM Z series mainframes and servers; ANZ has signed up as one of the pioneer users of IBM's Watson data analytics and business intelligence service; while Westpac renewed its deal with the company by signing a five year outsourcing arrangement with IBM in December 2010.

This latter contract is scheduled to expire at the end of the year unless it is re-signed.

Westpac's information services deal with IBM is, however, not an exclusive one. The bank injects competitive tension into the mix by using IT services from the likes of Infosys, Tata Consultancy Services and Wipro.

It is competition from these Indian outsourcing giants that has had IBM on the run for many years, forcing it to relocate operations to low-waged countries to benefit competitively from labour arbitrage.