IBM Cuts Jobs to Prioritize AI and Software Growth
IBM Announces Workforce Reduction Amid Strategic Pivot to AI
IBM, the 114-year-old technology giant, has confirmed plans to lay off thousands of employees as it reallocates resources toward artificial intelligence (AI) and software services. The restructuring will affect a "single-digit percentage" of IBM's global workforce of approximately 270,000 employees—translating to between 2,700 and 5,000 job cuts.
Details of the Layoffs
An IBM spokesperson stated the company "regularly reviews its workforce and makes adjustments as needed." The reductions are expected to primarily impact the infrastructure department in the United States. Affected employees will have 30 days to secure new internal positions before facing termination with severance packages.
Strategic Transformation Underway
This move aligns with CEO Arvind Krishna's broader strategy to prioritize higher-margin businesses, including:
- Cloud computing services (notably Red Hat)
- Software development
- The watsonx generative AI platform
Despite reporting a 10% increase in software revenue recently, analysts note slowing growth in Red Hat's business may have accelerated restructuring efforts. Internal reports suggest the U.S. infrastructure team could see reductions nearing 50%.
Industry-Wide Trend
IBM joins other tech giants in workforce adjustments:
- Amazon plans to cut 14,000 corporate jobs
- Microsoft and Google have made similar reductions The company previously automated HR functions using AI agents, shifting focus toward technical and sales roles.
Financial Context
The layoffs follow IBM's better-than-expected earnings report, highlighting the industry's push toward:
- Operational efficiency
- Concentration on profitable AI/cloud segments
- Adaptation to evolving market demands
Key Points:
- 📉 Workforce Impact: 2,700-5,000 jobs cut, mainly in infrastructure
- 🚀 Strategic Focus: Heavy investment in AI (watsonx) and high-margin software/cloud services
- 🌐 Industry Shift: Part of broader tech sector realignment toward automation and AI-driven operations