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IBM to Strengthen Foothold in France With New Collar Program


International Business Machines Corporation IBM recently announced that it is on track with previously announced investments in France, aimed at creating around 1,800 “new collar” jobs.

New graduates and experienced technical professionals are being hired for emerging technology roles pertaining to data science, cloud computing, IoT, AI, cognitive business, cybersecurity and blockchain. These skills have been termed “new collar” by IBM's chairman, president and CEO Ginni Rometty.

The company recently noted that more than 1,000 vacancies have been occupied. On the back of ongoing initiatives and expansion of “new collar” programs, IBM aims to fill the remaining vacant positions in the days ahead.

Status of Initiatives Undertaken

IBM in partnership with the French government will commence its P-TECH (Pathways to Technology Early College High School) classes in September. This program empowers disadvantaged young people in securing skilled jobs.

The company will roll out SkillsBuild digital platform initially in France. Job seekers can utilize the platform to access personalized coaching and digital content. This will enable them to stay abreast with the technical skills in demand and return to jobs. IBM aims to introduce the program in the U.K.and Germany in the second half of 2019, following which will be launched globally.

Moreover, IBM noted progress on its plans of developing IBM France Academy. The academy is aimed at empowering IBM France employees, partners and clients with robust skills to stay on par with the AI-era.

Other initiatives include OpenClassrooms apprenticeship program, introduction of new Security Operation Center and quantum centre, IBM Q Hub, to mention a few.

Through these investments, IBM is encouraging research and development of new collar skills in France.

Expanding Foothold in France Bodes Well

IBM’s notable customer base in France comprises Cegid, French National Council of Clerks (“NCC”) of Commercial Courts, Orange Bank, CréditMutuel, SNCF and Moët Hennessy Louis Vuitton SE, LVMH, among others. A majority of these clients leverage IBM Cloud, Watson, Blockchain and other services to accelerate their respective business processes.

With the ongoing initiatives aimed at empowering workforce with new age skills, we believe IBM is well poised to strengthen its presence in France.

Additionally, IBM Cloud offers local EU-based support to its clientele by which access can be confined to solely EU-based IBM employees. These factors are aiding the tech giant expand presence in Europe in general.

Analyzing the Facets of the Initiatives

As AI and robotics are becoming mainstream, the work place is transforming, paving the way for more skilled jobs to sustain digital transformation.

In fact, lack of skilled workers particularly from STEM (Science, Technology, Engineering and Mathematics) fields has been hindering technology players for quite some time.

Per a survey conducted by EY, Building a Better Working Europe, “The most alarming talent shortages are in digital skills, with cybersecurity (48%) and artificial intelligence (AI) and robotics (48%) identified as the scarcest skills according to the survey respondents.”

We believe IBM’s initiatives will help plug in the gaps and lead to a sustainable workforce in France. Moreover, research on emerging technologies is likely to drive innovation. We are of the opinion that transforming the work to a more-skill oriented one will drive costs down considering the broader outlook.

IBM Price and Consensus

International Business Machines Corporation Price and Consensus

International Business Machines Corporation price-consensus-chart | International Business Machines Corporation Quote

However, increasing investments are likely to weigh on margin expansion at least in the near term.

Zacks Rank & Key Picks

IBM carries a Zacks Rank #3 (Hold).

Some better-ranked stocks worth considering in the broader sector, include Cadence Design Systems CDNS,Verint Systems Inc. VRNT and j2 Global, Inc. JCOM, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Cadence, Verint and j2 Global is pegged at 12%, 11% and 8%, respectively.

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