IBM is planning to cut between 10,000 and 13,000 jobs as part of global reorganisation centred around Europe.
The restructuring should let IBM shift its focus to areas that promise higher growth and new markets.
As Western markets have become more developed, growth has slowed. IBM's first-quarter sales grew just three per cent to $22.9bn, the slowest in 10 quarters.
The company said in a statement that it hopes to reduce "bureaucracy and infrastructure" in countries that show lower growth, and create teams that work across borders rather than in local areas.
The latter will eliminate the need for a European organisation that oversees and coordinates the local organisations, according to IBM.
Big Blue expects to spend $1.3bn to $1.7bn on the reorganisation, and anticipated that the financial benefits will be visible by the second half of this year.
The vendor reported disappointing financial results for its first quarter of 2005, announcing profits nearly $190m short of analyst expectations.
IBM blamed the bad results on weak performance in France, Germany, Italy and Japan, and said it would start a reorganisation in the current second quarter.
Michael Gartenberg, research director at analyst firm Jupiter Research, told vnunet.com that IBM's troubles should not be read as a sign of overall weakness in the IT industry's recovery.
"It just shows the changing shape of the technology landscape," he said. "The world is not what it used to be."
IBM is in talks with local union representatives concerning the job cuts, but fears are growing for the 2,800 workers at the company's Greenock plant.
Amicus leader John Quigley said that any redundancies would be a "body blow" for the factory, which opened in 1951.
He expected Britain to bear the brunt of the redundancies owing to poor employment protection compared to other EU countries. IBM said that it has "initiated discussions of these changes with local consultation bodies".
IBM is releasing more details at 1pm BST today.
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