Tell HN: IBM and SAP are cutting thousands of jobs | Hacker News Reader

Tell HN: IBM and SAP are cutting thousands of jobs

91 pointsginzunza66 comments

IBM (IBM) announced the cuts Wednesday, saying they were related to the previously announced spinoff and sale of two business units. Some 3,900 positions, or 1.5% of its global workforce, are expected to go. The move will cost IBM (IBM) about $300 million this quarter, a spokesperson confirmed.

SAP (SAP), Europe’s largest software company, will lay off 2.5% of its global workforce of 112,000, or around 2,800 employees, according to an earnings report published Thursday. The restructuring will cost between €250 million ($272 million) and €300 million ($381 million); the company’s shares were down 3.3% in Frankfurt.

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Following the trend :-( Time to get rid of people they don’t want, without them look bad since everybody is doing it, and also they’ll have an excuse if financial results aren’t very good. IMHO it’s the retaliation of big companies to what remote working brought to all of us (freedom, better wages, quality time, escape from bad environments…).

Nah. It's about making your financial results look better. My company touts every quarter how not only is revenue up, profit per revenue is up, ie. we're making more money on the money we make. Yet, when it comes to compensation and dealing with cost of living, the statement is that we haven't met our targets so it's a 3% pool. Not minimum or maximum, but that for someone to get more someone else has to get less.

COVID had many enlightening observations about the economy, one of which is that there was a lot of inelasticity in consumer demand versus compensation. Companies have realized that there is a lot more value to extract from employees.

>profit per revenue is up, ie. we're making more money on the money we make.

This makes no sense to me.

The amount of profit per customer or item sold has increased. Instead of just increasing the number of sales, they have increased their profit margin on each sale.

Oh, the usual way to phrase that is “increased profit margins”.

At my last medium sized company there were at least a half dozen branches of “the budget”, with employees and sales people being measured against the most aggressive budget, and several levels of management adding their own buffers, and finally the board which was working off the most conservative/pessimistic revenue and profit forecasts. No idea if this is normal or not.

It is normal because most labor sellers are not able or willing to sell their labor at a higher price to a different buyer.

All that nonsense about pools and targets and budgets is just a polite way of the buyer saying “we are betting you will not quit for x number”.

As a labor seller, you should always just think of employers as buyers, and negotiate the way you would in any transaction. If you think you can get more, then shop around for a different buyer. Or a different line of business if your buyers are not earning much profit themselves.

>It is normal because most labor sellers are not able or willing to sell their labor at a higher price to a different buyer.

In order to sell at a high price, someone else must be buying...

This market maker analogy really isn't a win.

That is covered under “are not able to sell”.

And it is not a market maker analogy, it has nothing to do with market making.

The point is, the buyer dictating price is “normal” because sellers often are not in a position to turn down the offer, whether it be due to them not having an option or not being willing to take a risk.

This kind of conspiratorial thinking is a fib people say to make themselves feel better. "financial results aren't very good" is the leading cause of death of most companies -- you can't just gloss over it as if preventing it isn't the leading root cause.

The truth is that companies could afford a lot more less ROI positive resource investments, and yes that even extended to hiring. Now that companies are in a situation far rougher than anything we've seen in the past 15 years (end of zero interest rate policy and cheap funding), companies are scrambling to cut costs and maximize ROI on their existing costs, so that they don't die. They have to, now.

Not to diminish how hard it is to be impacted by layoffs, 1.5% and 2.5% is fairly small. This really does feel more like restructuring than what the rest of tech has been seeing.

> Time to get rid of people they don’t want, without them look bad since everybody is doing it, and also they’ll have an excuse if financial results aren’t very good.

This is IBM's classic modus operandi. I worked there from 2001 - 2013 and survived 17 rounds of deep layoffs during that time. IBM constantly manipulates their financial results on the backs of their employees.

I can well imagine there are lots of upset people having lost their jobs.

However it never seems to be a priority or even on radar for jobseekers to consider how a a company handles layoffs or handled layoffs in the past as a proxy for their own treatment should that time come again.

I wonder if this is partially because jobs seekers have over optimized for salary or total comp relative to other things like job security and working conditions.

I must have seen 00s of "Top 10 lists" listing places according to intern pay or grad pay with big companies like Meta and Snapchat always at the helm getting thrown around social media. I have never once seen places advertise that they haven't had to let an employee go.

Maybe it's too difficult to measure or just rare enough that it can be largely ignored while things like salary simply can't be ignored. I don't know -- just trying to look at the other side of the coin as it were.

Good to have savings or worse credit line to survive intermediary

Personally I'd focus more on making a layoff less of a traumatic event than playing ultra safe with a low salary in a low risk company.

For most software engineers it's not hard to build up a significant emergency fund. I'd advocate for 6 figures. Feel free to invest 80% of that as well in something liquid. Keep at least 3 months in cash.

Any recommendations on what type of accounts to use or what might be decent investments? I certainly wouldn’t put anything I’d call an “emergency fund” in stocks right now

High Yield Savings Accounts (HYSA) like Marcus by Goldman Sachs can be a good place to keep the 3 month cash reserves.

Marcus has lagged its competitors by 0.7% or more for all of 2022. I suspect Goldman Sachs is having problems dumping money into Marcus given its losses.

I would go with CIT Savings Connect, they have historically been near the top and they have a nice website.

https://www.doctorofcredit.com/high-interest-savings-to-get/

Yeah risk tolerance is up to you. Personally I went stocks and it worked out great, but I am not advising as such. If you go into a more risky asset it's really only a problem until growth provides enough of a buffer to handle the risk. I wouldn't really want a full 6 figures in a HYSA though when it could be earning a lot more.

Emergency funds in FDIC insured savings accounts. HSA accounts serve as the best tax advantaged backup that you can invest in a broad market ETF like VOO since they are triple tax advantaged, although ideally you never have to withdraw from here until retirement.

I consider retirement & HSA accounts separate from emergency fund. Max HSA, max 401(k) then build up emergency fund in liquid assets.

I do too, but HSA is a nice backup emergency because you can withdraw up to all of your accumulated healthcare expenses tax and penalty free.

So pay for all your healthcare expenses with non HSA funds, keep track of the expenses, and eventually, you probably will have accumulated $10k or $20k of healthcare expenses you can reimburse yourself for IF you exhaust your regular emergency fund.

It’s not just the money. Losing health insurance is pretty bad, especially if there are others on one’s insurance.

It stings a little, but is ultimately not that bad if you have a very healthy emergency fund. It’s generally much cheaper than housing.

How much would it be?

Look at your paycheck. Combine health insurance premiums that you and your employer pay each pay period. That would be your COBRA premiums.

Last I checked, blue cross ppo was around $1,600/mo for a family of four via a state marketplace.

So it is about the money, then? Surely, insurance companies don't object to you paying them directly.

> Surely, insurance companies don't object to you paying them directly

Adverse selection means an individual can’t get the same insurance a big organization buying for a large group can; ACA exchanges may (state markets vary a lot) mitigate that somewhat, but they don't fully make up for it. Part of this is orice for benefits, but the same benefit packages may not be available to you at any price (adverse selection means creates a kind of feedback loop where for certain things, there is no price where offering an option isn't a losing deal for the offeror, because the only people who would take it would be the ones for whom it would be a net loss for the seller to provide it.)

COBRA, though, allows you to keep your bigco insurance when you lose your job, as long as you take over both sides of the payment, for up to 18 months. So, in that sense, it is about the money.

The reason why I said, it is a mainly American problem: SAP is a German company. We can assume many people losing their job wont lose their health insurances because they live in Germany.

And this is all in the context of layoff sprees happening at mostly U.S. based tech multinationals. It’s not as if Booking.com has been doing layoffs- though it seems like they already did that a year ago. And certainly Spotify also laid people off.

the context might be different for people in different countries. SAP is more important for me than lets say Meta.

Yes, but it would seem not to the HN audience, otherwise threads like this wouldn’t have 600+ replies because the mostly North American audience is unfamiliar with SAP.

https://news.ycombinator.com/item?id=32776276

https://news.ycombinator.com/item?id=22244750

again, then Americans wouldnt care about SAP lay offs which should be a bigger thing in Germany. Please accept different perspectives.

Yes, then please accept the different perspective of people concerned about losing their health insurance.

sure. I just mentioned it is an American problem and not a concern in Germany. People just shouldnt assume American problem = everywhere a problem.

Ever since Obamacare banned discrimination for pre-existing conditions, health insurance is entirely a function of money. If you're taking home significantly more money, you can set a small fraction of it aside to cover an employer insurance gap.

The problem for programmers is not cost of insurance, the problem is weird long-tail shit like insurance denying treatments you need, or wildly over-billing you.

"small fraction" is optimistic imho. Health insurance costs me more than my home mortgage payment (and it's crappy insurance that pays almost nothing). In my experience it isn't possible to reproduce the "BigCo health insurance" experience yourself, regardless of expense, unless you allow buying your own hospital.

Your home must either be a cardboard box, in the middle of nowhere, or you bought it two decades ago.

Its value is not what it pays for, it's value is capping out-of-pocket maximums in the worst-case. (Any serious medical situation will quickly run you up to them.)

Also, have you ever looked at the 'Employer pays' line item on the insurance section of a bigco paystub? Mine is more than my rent. (Maybe I should move to a bigger apartment.)

I understand that there's a huge sticker shock to having to pay your + an employer's portion of insurance, but it's still a function of money, and working for a bigco that does 7% layoffs every 8 years is a really good way to earn a lot of money.

And it's not like there are any 'play it safe' places in a recession. You can't predict the future, and small companies go belly-up, and do layoffs just as much as big ones.

Why are you making assumptions about OPs numbers? Instead let's talk the numbers you are trying to minimize. Cobra averages $600 per person per month. That is $2400 per month for a family of four. I agree when I was self employed my largest cost was always health insurance, but for someone who has never been self employed a new $2400 a month bill on top of being fired can be quite a shock and add a ton of addition stress and pressure.

The average mortgage in my town is north of $5000/mo.

That $2400/mo is the true cost of insurance. Your bigco employer pays most of it, and you pay the rest.

So, yes, when that part of your pay is lost, it sucks. It sucks a lot. But that's not what we're discussing. We're discussing the financial situation you're in when you get paid bigco wages, and have to deal with 8% layoffs every 8 years, or working somewhere else, where you get paid substantially less (And also probably have to deal with layoffs, it's just that they don't hit the front page of HN).

It's a financial no-brainer to me. If the wage delta is more than a rounding error, I'm much better off, financially in just taking the money.

COBRA, or a state-equivalent, is available for nearly all US employees for 18 months after a layoff. Yes, it's expensive, but not outrageously so - I've been on COBRA a few times, and the expense is just because you're paying for the piece the company used to.

Point being it's still just money at the end, and saving up for a rainy day fund should also include COBRA payments in the calculation of how long the fund will last.

Cobra is on average $600 per person per month. For a family of 4, that's $2400 per month. For something for people who are specifically unemployed that seems outrageously expensive.

Adding people to the plan is not linear, i.e. there are individual plans, spousal plans and family plans (I'm sure they probably exist somewhere but I've never seen a plan that charges more per kid on a family plan).

But yes, family plans are expensive (I've seen them average about $1500 a month for COBRA family plans), but that just gets to the point about saving enough in a rainy day fund to include healthcare costs.

In the US, at least in decently managed states, you can transform money into subsidized health insurance. (Covered CA for instance)

Well, there is a kind of employer that will always have the top spot for layoff resistance -- the government. Nonprofits as well are generally similar.

I'd add funded startups as well - In my experience, they generally have a 12 month runway, without requiring any outside/customer revenue.

Of course, once the initial funding/runway runs out, it can be quiet a different story :-P

> I wonder if this is partially because jobs seekers have over optimized for salary or total comp relative to other things like job security and working conditions.

People move around so often now to keep up with market comp that it's not surprising people don't weight job security that heavily in their decision on where to work. Staying at the same company for many years is a recipe for stagnation. We all learn and grow when going through change, and it keeps the industry vibrant to have people with different knowledge and experience flowing through multiple companies throughout their career.

While rare, I have seen it happen. A family owned financial services company's recruiter made sure I knew the company had never had layoffs to try and entice me to accept a position.

> I have never once seen places advertise that they haven't had to let an employee go.

Mathworks (of MATLAB fame).

They're still a private company, BTW.

almost all of ibm's most experienced and hands on people are now at Kyndryl. IBM continues to pay Kyn people to manage their own systems. Its funny given how much more costly that model is but layoffs impress the hedge funds.

In IBMs case, this is a regular occurrence, no?

https://www.washingtonpost.com/news/on-leadership/wp/2015/01...

I worked at IBM for too many years. This is nothing new. Their MO around 2010-2015 was to do quarterly reductions in order to minimize the press interest.

In the UK the redundancy lists were often based on completely inaccurate "employee job codes". These were seemingly set when you joined the company and there was no process to review or update your code. At one stage I was on the redunancy list despite working in a 'Strategic' area. I only managed to dodge it after my Exec/Partner lobbied for someone to see sense.

So IBM pay is $300,000 / year on average for the impacted roles? Seems very high.

It's funny to write "IBM (IBM)" and "SAP (SAP)".

haha, totally right

>It's funny to write "IBM (IBM)" and "SAP (SAP)".

It's because in the original text, the text in (parentheses) was the stock ticker symbol that linked to its chart performance:

https://www.cnn.com/2023/01/26/tech/ibm-layoffs-intl-hnk/ind...

The copy&paste removed the hyperlinks which makes the extra text look redundant.

This is chump change for these companies, thanks Wall Street.

3900 positions ~ 300M, 1 position ~ 80k

That number is for quarter

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