IBM begins laying off its entire Russian workforce

The company suspended operations back in March but kept employees on the payroll.

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IBM will begin an “orderly” wind-down of its operations in Russia, according to a memo from CEO Arvind Krishna that was released publicly today. The company suspended business operations in the country back in March, joining a wave of other Western companies that chose to either halt sales or pull out of Russia completely following its invasion of Ukraine. Despite no longer doing business in Russia, IBM kept paying its Russia-based employees. But US sanctions on Russian banks have made it harder for the company to pay its employees in the country, Reuters reported last month.

The wind-down means that IBM will also terminate the employment of its Russia-based workforce. “This process will commence today and result in the separation of our local workforce. Our colleagues in Russia have, through no fault of their own, endured months of stress and uncertainty. We recognize that this news is difficult, and I want to assure them that IBM will continue to stand by them and take all reasonable steps to provide support and make their transition as orderly as possible,” wrote Krishna in the memo.

The company told investors that no longer doing business with Russia will have very little impact on its bottom line. “Russia is a very de minimis part of IBM,” the company’s finance head Jim Kavanaugh said during a first-quarter earnings call in April. Russia accounted for roughly 0.5 percent of IBM’s total revenue last year, or $300 million out of its total revenue of $57.4 billion.

IBM has a number of high-profile customers in Russia, including federal banks, energy companies and Russian Railways. The company even held its Think Summit in Moscow back in 2019, where it highlighted its many Russian clients. But since March, the company has stopped providing “goods, parts, software, services, consulting and technology” to Russian companies, according to Reuters.

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