After Amazon, Microsoft, and other major tech firms, IBM has announced plans to cut thousands of jobs as it looks to invest in faster-growing areas like artificial intelligence consulting and software, Reuters reported. The tech giant did not reveal exactly how many roles will be affected but said in a statement that the layoffs will impact “a low single-digit percentage” of its global workforce. IBM employed about 270,000 people worldwide at the end of last year.
Why is IBM cutting jobs?
“We routinely review our workforce and at times rebalance accordingly,” the company said in a statement, as cited by Reuters. “In the fourth quarter, we are executing an action that will impact a low single-digit percentage of our global workforce.” Despite the cuts, the company said its US headcount will likely stay about the same, as some job losses will be balanced out by new hiring in other areas.
IBM shares, which have climbed more than 35% this year, slipped nearly 2% on Tuesday following the announcement.
IBM joins a long list of major tech companies, including Amazon, Meta, and Google, that have reduced their workforce in recent months as they pour more money into AI projects. Many industry leaders have said artificial intelligence will help boost productivity by assisting employees with tasks like coding and data analysis.
This isn’t the first time IBM has reduced or adjusted its workforce. For years, the company has been following the “workforce rebalancing” technique, often cutting certain roles while hiring in others according to its business strategy.
Push towards AI and cloud growth
Under CEO Arvind Krishna, IBM has been slowly shifting its focus from traditional hardware to software and cloud services. A big part of this growth comes from its “Red Hat” division, which helps companies use AI and cloud-based tools to work more efficiently.
IBM recently reported strong earnings for the quarter ending in September, with sales rising 9% to $16.33 billion, exceeding Wall Street’s expectations, according to the New York Times.
During a call with analysts, Chief Financial Officer Jim Kavanaugh said there were clear signs that AI culture among large corporations has started. He added that roughly 80% of IBM’s AI consulting and software customers were new in the past six months.
Bookings for IBM’s AI-related work also peaked recently, reaching $9.5 billion in the third quarter, a figure that investment bank Jefferies described as evidence of “strong momentum in AI-driven demand.”
Since Arvind Krishna took over as CEO in 2020, IBM has been working towards high-growth markets like cloud computing and artificial intelligence. One of the biggest moves came the next year, when IBM spun off its technology services unit–which maintained and upgraded older corporate systems.