Updated: IBM Watson slashed workforce this week
After multiple press reports said IBM Watson laid off 50-70 percent of its workforce, a research note published by investment banking company Morgan Stanley on May 31 pushed back on that percentage. IBM, for its part, said the layoffs were small.
“First, any layoffs come on the back of IBM’s reported $613 million restructuring announced on the April 17th earnings call – of which, about $100 million related to the Cognitive business division,” according to Morgan Stanley. “IBM management, as recently as the March 8th, 2018 investor day, discussed aggressive hiring in strategic areas, including Oncology within Watson Health.”
“IBM is continuing to reposition our team to align with our focus on the high-value segments of the IT market,” the company said in a statement. “We’re not discussing specific numbers of employees affected, but it’s a small percentage of our global Watson Health workforce, as we move to more technology-intensive offerings, simplified processes and automation to drive speed.”
That said, the cuts appear to run deep enough to affect some of IBM’s stellar acquisitions: Explorys, Phytel, Merge Healthcare and Truven Health Analytics.
IBM announced at HIMSS15, it would be acquiring population health company Phytel and Cleveland Clinic spinoff Explorys, a cloud-based data analytics vendor. Both Phytel and Explorys would become part of IBM's new Watson Health unit.
IBM officials also announced then, the establishment of IBM Watson Health, a new business unit that would be headquartered in the Boston area, and a new partnership with leading companies, including Apple, Johnson & Johnson and Medtronic to help optimize consumer and medical devices for data collection, analysis and feedback.
In February 2016, IBM announced it would pay $2.6 billion to acquire Truven Health Analytics for its Watson Health unit. IBM Watson paid $1 billion for Merge in December 2015.
Then in February 2017, MD Anderson, which is part of the University of Texas, ended what had appeared to be a promising partnership with MD Anderson Cancer Center, However, auditors at the University of Texas noted the work cost MD Anderson more than $62 million, without achieveing any of its goals.
With reports suggesting that Big Blue laid off up to 70 percent of the workforce at its Watson Health operation, one former employee wrote on The Layoff.com that
“Watson Health went from 7000 employees to less than 4000 in the last 5 days. All in the Provider business and WH Cloud GONE. The Simpler Provider team will be next month.”
This story was updated to include comments from Morgan Stanley.