Siemens Announces 4,200 Job Cuts

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Siemens is downsizing 4,200 jobs over the next two years, while reportedly preparing to spin off its IT division in the autumn of 2010

Engineering and industrial-technology conglomerate Siemens announced on 18 March that it will lay off 4,200 employees in the IT division, in what some news sources are claiming is preparation for an IT division spinoff. Siemens said it plans to invest €500 million in SIS, its IT solutions and services business, by 2012.

“The combination of IT outsourcing and specific industry solutions makes SIS an excellent partner for comprehensive IT consulting and IT management and can build on the specific industry and software know-how of the Siemens Sectors, which are world leaders in their businesses,” Siemens chief financial officer Joe Kaeser said in a statement.

Germany takes the brunt

Roughly 2,000 of the 4,200 job eliminations to occur between now and 2011 will take place in Germany. Siemens employs over 35,000 employees. In 2009, the company completed a two-year reduction of nearly 17,000 jobs in sales and administration positions, according to Reuters.

“We will implement these measures responsibly. The clear focus will make our IT business fit for the future,” Siemens Chief Human Resources Officer Siegfried Russwurm said in a statement.

Here is how the company explains what will happen during the layoff period:

“In making the job reductions connected with the reorientation of the IT service provider, Siemens intends to exhaust all possibilities for voluntary measures and to implement the cutbacks in as socially compatible a way as possible. Measures will include, for example, the termination of employment contracts by mutual consent or the non-renewal of temporary contracts. The required consultations with employee representatives will be initiated immediately.”

Restructure of IT division

It does appear based on company statements that it is preparing to restructure its IT division for potential changes and a spinoff.

“The demands on IT and software expertise in our strategic businesses are steadily increasing, and the attractive growth fields of smart grids, product lifecycle management (PLM) and efficient health care solutions are all strongly IT-driven,” Russwurm said. “The ability to operate customer IT infrastructures as well is also an excellent add-on and generates substantial customer value. In the past, we’ve frequently demonstrated that we vigorously tackle all necessary measures. Only this approach ensures competitiveness and, thus, safeguards jobs in the long term.”

Siemens plans to spin off SIS as a Siemens subsidiary, according to Dow Jones:

“Siemens’ restructuring initiative lays out plans to operate SIS as a separate IT company from the start of the next financial year on 1 October. SIS will remain a Siemens subsidiary, however, chief financial officer Joe Kaeser said at a press conference Thursday.”

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