IBM lays off 1,570 U.S. workers to cut costs

SAN FRANCISCO (Reuters) - International Business Machines Corp. (IBM.N) said it laid off about 1,570 employees on Wednesday in its computer services business in the United States, part of a plan to trim costs in the unit.

The lay-offs bring to about 3,700 the number of jobs IBM has cut this year in its services unit, which accounts for about half of total revenue but whose profit lags the company's software business.

Earlier this month, IBM eliminated about 1,300 jobs in the U.S. services business. The rest were cut in the first quarter.

IBM, which had 355,766 employees at the end of 2006, said on April 17 it was cutting costs in the United States amid weaker U.S. demand for its services and products in the first quarter. IBM spokesman John Bukovinsky said he did not have information showing where Wednesday's job cuts took place.

IBM, based in Armonk, New York, is trying to boost profitability in services by replacing some employees with software that can be replicated from one contract to another. This year's job cuts occurred as customers shortened or otherwise cut services contracts, Bukovinsky said.

"The services business is tremendously cyclical," he said. "This is basically the result of (clients) looking over longer-term contracts and deciding they don't want the work done, or deciding they can do the work with fewer people."

Bukovinsky said the jobs were not being shifted to lower-cost labor markets such as India. IBM in the first quarter paid about $55 million for job cuts.