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EWC Opinion - Kyndryl, Return to Workplace and future IBM

After two years, the IBM EWC could run a regular meeting again in person, respecting all precautionary safety measures. Compared to WebEx meetings, the team truly valued and appreciated the opportunity for face to face dialogue and discussion, as well as the chance to establish social relations and interactions. Exactly half way through the IBM EWC meeting, during the night between November 3 to November 4, the hard spin-off of GTS Infrastructure Services into the new and fully independent company named Kyndryl, became reality. As of that moment, the IBM EWC no longer represented the Kyndryl colleagues around Europe. Six out of nineteen IBM EWC members officially moved from IBM to Kyndryl overnight. The membership is grateful for their active contributions to the IBM EWC over the years. The IBM EWC is confident that at Kyndryl the EWC will be continued shortly and is most willing to advise and to support where needed.

The IBM EWC membership observes that IBM office locations around Europe have gradually opened up again after the summer, applying the guidelines in IBM's Global Return to Workplace Playbook. The team appreciates the good work of IBM's senior management and Crisis Management Teams (CMT) in taking all necessary actions to ensure that employees around Europe remain safe and can continue to work from home. However, the IBM EWCalso believes that IBM's corporate COVID-19 rules and protocols are sometimes seen and experienced as significantly more restrictive than local government policies around Europe. This could create 'imbalanced situations' or internal misunderstanding and even reluctance amongst IBMers to return to an office location. From a commercial point of view, the IBM EWC believes that the company should be conscious not to apply our own rules too strictly, also given the potential negative implications for our business. The IBM EWC continues to respect and support IBM's guidelines, but calls for additional delegation to local CMTs around Europe to apply tailormade solutions and approaches in line with local law and practice. Furthermore, the IBM EWC noted that IBM US announced that all its employees should be vaccinated before December 8, 2021 to avoid being faced with unpaid suspension. The membership urges IBM senior management in Europe to decline such practice and ensure that IBMers who are expected to be present in an IBM office, will have the possibility of getting reimbursed for any expense related to required medical documentation such as PCR tests.

During the presentation of IBM Europe's financial results it became apparent that, with the exception of IBM Consulting, the performance in 3Q 2021 was again disappointing overall. The EWC membership remains concerned about the revenue contribution of our Cloud & Cognitive Software (C&CS) business, especially annuityrevenue, although the overall trend seems to be improving. Notwithstanding IBM's corporate results in C&CS, Europe continues to deliver below budget and is again losing share in a growing market of utmost strategic importance. Despite significant revenue growth of Red Hat Europe in the quarter, this contribution does not, in absolute terms, compensate IBM Europe's revenue decline. The IBM EWC believes that there is a clear correlation between the number of employees, IBM's visibility and footprint in the market and the financial results. The membership requests IBM senior management to retain current staffing levels and to attract additional employees, especially in our C&CS and eco-system organisation to return to growth.

At the EWC meeting, a next step in the evolution of our newly introduced Go To Market model was announced, based on the practical experiences and feedback from the Markets in 2021. The membership was informed orally that as per January 2022, the current S1 and S2 segmentation will be further modified and focused around three account types; Signature Clients, Strategic Clients and Select Clients. Client revenue contribution is an important criterium for this new segmentation that will apply to the IBM Technology and Global Markets organisations that will be merged. In addition, it was said that several new roles will be introduced to further accelerate our technical and more experiential sales approach. IBM senior management also stated that there will be close alignment with the operating model of IBM Consulting and that the Nordics and BeNeLux markets in Europe will be merged into one market to create more critical mass and a better pool of technical skills. IBM senior management stipulated that this new model will not lead to headcount reductions. The IBM EWC's initial impression is that these changes to the model are positive overall. However, the team will need more detailed information in writing to provide an informed opinion. The membership requests IBM senior management to actively support employees to up-skill and re-skill into the new roles and to engage with the local representative bodies shortly to ensure a locally relevant implementation.

After the spin-off to Kyndryl, IBM has become a fundamentally different company. In 'future IBM', Quantum Computing is an important new dimension that will be added as a cloud-based service in IBM's infrastructure portfolio. The IBM EWC is proud of the work of our R&D teams to develop a stable and scalable quantum computer, to be open and transparent about this development and to allow partners and scientists to benefit as well. Developers can use quantum technology for frictionless development by applying a set of uniform models. The EWC finds it difficult to predict exactly how and when quantum computing will contribute to IBM's financial growth. The team is pleased that IBM is committed to move the organisation from voluntary Quantum Ambassadors to a structured team to further develop the technology and to bring this new architecture to the market.

Even though the Resource Action announced in 4Q 2020 has been concluded in almost all European countries, the IBM EWC received indications that additional optimisations have been prepared or are already being implemented, especially in support units such as Enterprise Operations & Support, Q2C and Marketing. IBM senior management stated that it is not aware of any additional program or Resource Action around Europe. It was confirmed though, that the Marketing organisation will implement a new, simplified structure, to be more aligned and integrated with the new operating model of future IBM, to become more effective and to operate in a less fragmented fashion. A significant number of European Marketing colleagues will be in scope of this simplified structure. IBM senior management informed the IBM EWC that internal redeployment will be the solution for Marketing employees in scope. The membership requested IBM senior management to inform and involve local representative bodies urgently about all these optimisations, to significantly invest in re-skilling and up-skilling of Marketing colleagues with mostly unique job roles and skill sets and to actively coach and support them in finding new roles inside IBM.

IBM European Works Council
Madrid – November 4, 2021