IBM to cut thousands of roles as it doubles down on software and AI
IBM to cut thousands of roles as it doubles down on software and AI
IBM plans a global workforce reduction in the low single digits as it pivots toward AI, software, and cloud services, signaling a strategic shift under CEO Arvind Krishna.
IBM plans to cut thousands of roles this quarter as it pivots toward higher-growth software and services, a move that aligns with CEO Arvind Krishna's strategy to capitalize on AI and cloud demand. The company said the action will affect a low single-digit percentage of its global workforce, with some U.S. roles likely impacted even as overall U.S. headcount is expected to remain roughly flat year over year. The job reductions come as IBM continues to weave its legacy hardware and consulting businesses with new software platforms and automation services in a bid to boost margins.
Under Krishna, IBM has sharpened its focus on software and AI, aiming to benefit from rising cloud spending through its Red Hat division. The pivot follows earlier reallocations in marketing and HR and centers hiring on software development and sales. IBM's approach reflects a broader push in tech to invest in high-margin areas while managing headcount to align with demand.
Market reaction has been cautious. IBM's shares have climbed more than 35% this year, yet investors greeted the layoff news with a muted response as concerns persist about growth in cloud software. The company reported a slowdown in cloud software growth last month, adding pressure to sustain momentum as AI-enabled offerings expand.
IBM employed about 270,000 workers globally at the end of 2024, and the company cautioned that while job cuts will occur, total U.S. employment is expected to stay roughly the same for the year. The move underscores a broader industry trend as tech companies recalibrate bets around AI, automation, and outsourcing, while the company continues to lean on Red Hat to monetize hybrid cloud services.
Analysts say the challenge for IBM will be executing a large-scale workforce adjustment without dampening innovation. If the company uses the reductions to reallocate talent toward software development and AI, the pivot could strengthen IBM's ability to compete in a market that prizes speed, scale, and AI-enabled services.
Cover image source: IBM to cut thousands of roles in focus on software growth: Report 🔗
