Kyndryl Follows In IBM's Footsteps With Rolling Layoffs Likely Affecting Thousands

Special report Kyndryl, the IT services biz spun out of IBM in late 2021, has been following in the footsteps of its parent by discreetly shedding hundreds of workers, largely in the US.

The reason, we're told, is that the firm has not been winning new IT services contracts.

In the wake of our report in mid-September about IBM's quiet layoffs, we heard about ongoing, unpublicized job cuts at Kyndryl from two former employees and one current employee who expects to be let go shortly.

Kyndryl did not respond to a request to comment, though the firm has acknowledged its intention to get rid of employees in its financial filings. In its fiscal 2023 annual report [PDF], covering the 12 months to April 2023, it revealed it had 90,000 employees. Its fiscal 2024 annual report [PDF] reduced that number by 11 percent to 80,000.

In that fiscal 2024 – the 12 months to April 2024 – the biz spent $190 million trimming its workforce, it reported in a recent financial filing. That paperwork states further staff reductions began in the quarter ending June 30, 2024. And in fiscal 2025, the 12 months to April 2025, the IT corp expects to spend $100 million on workforce changes.

Given the $190 million charge during a period that saw the loss of 10,000 employees in fiscal 2024, we can estimate that the $100 million in workforce rebalancing charges anticipated in fiscal 2025 will lead to the ouster of around 5,200 workers by the end of March next year.

They've been laying off a lot of people. Almost my whole department got benched

The current and former Kyndryl employees who spoke to The Register – we'll use the pseudonyms Avery, Brooks, and Carmen because of concerns about career consequences – reported that Kyndryl conducts layoffs by putting people "on the bench."

The trio all hold senior technical roles.

"My whole team has been laid off or is in the process," Avery told The Register. "It is called being 'moved to the bench.' We were there with what I believe is many hundreds. There were plenty of others before us and I have a current teammate on the bench and there are tons of project managers on there with him."

The bench is currently occupied by somewhere between a hundred and two hundred employees, we're told. According to Avery, the benching of employees picked up in the fourth calendar quarter of last year and is ongoing.

"They've been laying off a lot of people," said Brooks. "When I left, there were over 100 people on the bench in the US alone. Almost my whole department got benched."

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Carmen told us that Kyndryl employees who are not being billed to contracts 70 percent of the time or more generally get benched – as Carmen presently is. "If you're not attached to an active project and you're not actively billable against that active project, you're in what we call a non-billable – you're not billing all your hours," Carmen said.

Asked whether those being benched tend to be more expensive because of their seniority, Carmen speculated that Kyndryl is trying to reduce its US technical staff in order to offshore what work there is.

"There are no new contracts coming in," reported Carmen. "And I think eventually they're going to have to start benching their management staff – their senior management – because right now there's just nothing."

They're going to have to start benching senior management because right now there's just nothing

Among the three individuals we spoke to, the consensus was that Kyndryl just wasn't bringing in enough new business, so layoffs were necessary to keep the stock price up.

"Our sales people seem to want to hit a home run, you know, they want the hundred-million-dollar contracts and stuff like that," said Avery. "I just don't think those really exist anymore."

Avery added that salespeople price the firm out of smaller contracts that would keep engineering staff busy – and thus off the bench.

"That's how they're doing their layoffs now, through the bench," explained Brooks. "Basically, if you don't have a contract for three weeks, you automatically get put on the bench. If you can't find any work within Kyndryl – which, you know, if you're a US employee is damn near impossible – [you get laid off]."

And contracts from other businesses to have Kyndryl run their IT services have been scarce, we're told.

Before cloud

"You used to have to have highly skilled people to do things before the cloud," explained Brooks. "You don't need highly skilled people. You can manage your daily environment through a web browser."

Brooks said those being let go are mainly in their 40s or older. "There were very few people under 45 being laid off," Avery observed, adding that it's not simply about age. "For me, it was just work. We didn't get any new contracts. And everyone I've talked to is in the same situation.

"For those kinds of systems, there's a lot of competition, especially from TSC [Tata Systems Consulting]. [Kyndryl] is always trying to get the best cost labor that they can get. And honestly, American workers just don't fit into that."

While those we spoke with credited Kyndryl for offering three to twelve months of health coverage (depending upon years of service) and three months of severance pay to those let go, the separation agreement requires former employees to agree to arbitrate future disputes rather than pursue them in court.

And it requires that former employees release Kyndryl – to the extent allowed by law – from any claims of discrimination, retaliation, and statutes related to civil rights and labor law. ®