IBM to cut 5,000 jobs in U.S: sources

NEW YORK, USA: IBM will cut about 5,000 jobs in the United States, adding to similarly large cuts in the past few months, sources with knowledge of the matter told Reuters on Wednesday.

The job cuts will account for over 4 percent of IBM's U.S. workforce, which totaled around 115,000 at the end of 2008. The sources, who were not authorized to speak publicly on the issue, said the cuts will mostly be in IBM's global services business, which includes outsourcing and consulting services.

According to 'The Wall Street Journal', many of the jobs are being transferred to India.

An International Business Machines Corp spokesman declined to comment.

The company, which had a total workforce of 398,455 as of the end of 2008, has not disclosed how many jobs it has cut so far this year, but has said it was making "structural changes" to reduce spending and improve productivity.

"I think the company showed a lot more stability than most its competitors. At the same time, I think it's wise to remember that the economy remains unsettled," said Charles King, principal analyst with technology research firm Pund-IT.

"It makes sense for a company like IBM to take a close look at its employees and projects that are in process and so on, and play the safe game."

Wednesday's news also comes as IBM is in exclusive talks to buy Sun Microsystems Inc (JAVA.O), according to sources familiar with the matter, a move that would create a clear leader in the high-end computer server market.

IBM, which now earns around two-thirds of its revenue from outside the United States, has been expanding its workforce in emerging markets like India and China.

At the end of 2008, employment in the BRIC countries -- Brazil, Russia, India and China-- totaled around 113,000.

IBM has been hit by slower U.S. technology spending, and its fourth-quarter revenue fell 6.4 percent from a year ago, although it has fared better than many rivals thanks to its global footprint and a decreased emphasis on hardware sales.

A month ago, IBM affirmed its full-year forecast of $9.20 earnings per share, and said contract signings for its business services had grown so far this year.

IBM shares fell 0.42 percent to close at $97.95 on the New York Stock Exchange.