The new wave of redundancies announced by Kyndryl is raising serious concerns within the company. After an initial series of job cuts, the IT services company, recently spun off from IBM, is planning further significant headcount reductions. This decision comes against a background of restructuring and cost-cutting, at a time when the company is facing major financial challenges.
Massive lay-offs ahead
Kyndryl has announced its intention to allocate a further $100 million to finance further headcount reductions between now and the end of the financial year. This follows a first wave of layoffs that has already cost the company $190 million. It is estimated that around 5,200 employees could lose their jobs by the end of March 2025, representing a significant proportion of Kyndryl’s current workforce.
The scale of this restructuring is underlined by the evolution of the company’s workforce:
- 2022: 90,000 employees
- 2023: 80,000 employees
- 2025 (projection): Potentially fewer than 75,000 employees
This drastic reduction in the workforce is accompanied by specific departure conditions. Affected employees would be offered compensation packages comprising between 3 and 12 months’ medical cover, depending on seniority, plus 3 months’ severance pay. On the other hand, these offers would be conditional on the abandonment of any claims of discrimination or legal action against the company, raising ethical and legal questions.
Controversial downsizing strategies
The methods employed by Kyndryl to carry out this downsizing are attracting fierce criticism. In the U.S., current layoffs are said to target mainly part-time employees over 45, a practice that could be perceived as discriminatory. In France, the CFE-CGC trade union has expressed concern about possible unequal treatment and targeted controls.
Kyndryl’s management is said to have implemented new strategies to justify layoffs:
| Method | Description | Potential impact |
|---|---|---|
| Control of time clocks | Increased monitoring of attendance times | Penalties for non-compliance with schedules |
| Compliance with telework agreement | Strict verification of days of presence in the office | Grounds for dismissal in the event of non-compliance |
| Obligation to return to the office | End of generalized telecommuting | Incentives for voluntary resignations |
These measures raise concerns about a potential strategy to induce voluntary resignations. By imposing a return to the office, the company could seek to reduce its workforce without having to bear the costs associated with redundancies. This approach, if confirmed, could have negative consequences for employee morale and the company’s reputation.
Restructuring and strategic reorientation
Faced with persistent financial difficulties, marked in particular by an 8% drop in sales in the last quarter of 2021, Kyndryl is seeking to redefine its market positioning. The company aims to reduce its annual expenses by $200 million, potentially by eliminating the least profitable activities from its portfolio.
To get back on track, Kyndryl is banking on the development of new, high value-added services:
- Cybersecurity
- Digital transformation
- Cloud computing
- Artificial intelligence
With this in mind, the company has entered into strategic partnerships with cloud giants such as Microsoft, Google and AWS. These alliances are designed to expand Kyndryl’s business opportunities and strengthen its position in the enterprise IT services market. The company’s CEO is optimistic about the prospects for the company, now independent of IBM, and hopes that these partnerships will help attract lucrative new contracts.
Challenges and prospects for the future of Kyndryl
Despite current difficulties and drastic cost-cutting measures, Kyndryl’s management is optimistic about the company’s future. The bet on partnerships with cloud leaders could indeed open up new growth opportunities. However, the company will have to face up to several major challenges to ensure its sustainability and development:
Firstly, Kyndryl will have to make a successful transition to higher value-added services, while maintaining the quality of its existing services. Downsizing must not be to the detriment of the company’s technical and operational expertise. In addition, the company will have to work to restore the confidence of its employees and attract new talent in a context of restructuring.
Finally, Kyndryl will have to prove its ability to differentiate itself in a highly competitive IT services market. Independence from IBM could be an asset, enabling the company to develop more diversified partnerships and adapt its offering more quickly to market needs. On the other hand, this autonomy also brings with it new challenges in terms of brand positioning and recognition.
