A decline of 1500 jobs in IBM has been reported because of the shift from server to cloud computing. The threat to the jobs in IBM this year is between 1200 to 1500, which is greater than the decline of Ford Motor, which would occur due to its exit from Australian manufacturing in 2016.
The cloud trend has changed its way in dealing with the customers buy technology which made the vendors like HP and Dell struggle to adapt. As IBM already has cloud computing service, they are tending to focus more on this area for their growth. Though the company didn’t confirm or even deny this, yet a spokesperson said that the business was repositioning.
The spokesperson said that the company is focusing more in the growth areas of future: Big Data, cloud computing, social business and the growing mobile computing opportunity. She also said that the company always invests in transformational areas, and as a result they need to remix their skills so IBM can lead in those higher-value segments in both emerging markets and in more mature economies.
The cloud customers of IBM in Australia are currently served by a data centre in Sydney. Microsoft and Oracle have also thrown themselves open to the Australian facilities to calm the customer fear about data sovereignty.
Hit To The Old Vendors
An analyst at technology firm Telsyte, Mr. Rodney Gedda said that it is not easy to think about the job decline as the decision was made behind the closed doors. Mostly, vendors like IBM are hit by the trend of cloud computing and software-as-a-service.
“The push of IBM into cloud services is the right move and the transformation will not be painless. As the new technology of cloud service requires possibly less need of people for supporting on-premise infra structure, IBM decided to cut short the number of employees this year.” – says Gedda
Gedda says that the cloud service providers give a lot of efficiency but still they will get their own trouble of engineering and for that, they tend to go to OEM’s [original equipment manufacturers] and purchase custom servers. They will also go to manufacturers for building a unique server which will help them in their environment.
Because of these sort of activities, traditional vendors struggle to cope up the situation and they tend to compete with another dynamic system for their survival.
Declination In Hardware
According to the analyst firm, Gartner, the hardware market is declining dramatically in Australia than any other place in the world. Australia has faced the declination of shipment servers and revenues in 2013, when compared to 2012. In Australia, HP is dominant in serving machines & revenue and IBM stand only second by revenue, but globally, IBM is number one.
Worldwide server sales also declined in the first quarter but by a more modest 0.7% year on year for shipments and 5% year on year for revenue, according to Gartner.
Along with the declination of hardware sales, Gedda states that the rise in cloud computing service tends to buy all the technology from a single vendor which will hit the market of traditional vendors in both the hardware and software space.
Though HP is world’s largest provider of PC’s and printers than IBM, not coincidentally, they also announced its looming of job opportunity to 8% of its work force worldwide. Gartner figure out that the PC and mobile sales are about to decline sharply with an 18% decline in shipments in Australia and an 11% drop worldwide.
Financial Issues
According to Gedda, financial forces are other factors which send the jobs to New Zealand or Asia.
The cut of 10% work force from IBM results in the cutting of 2 % globally. Even the profit percent has come down in this year, which disappointed the companies worldwide.
The Australian market has declined a lot in this year and the consulting division of IBM, which is the biggest part of IBM, is also facing the threat.