Dive Brief:
- IBM plans to cut thousands of roles during the fourth quarter, the company said Tuesday. Despite the “low single-digit percentage” trim to its global workforce, the company expects its U.S. headcount to remain flat year over year. IBM employed 270,000 people as of Dec. 2024, according to its most recent annual report.
- “IBM’s workforce strategy is driven by having the right people with the right skills to do the work our clients need,” IBM said in an emailed statement. “We routinely review our workforce through this lens and at times rebalance accordingly.”
- The headcount trims come as IBM sharpens its focus on software and infrastructure, two of the fastest growing business segments during its third quarter, in support of rising demand for AI services.
Dive Insight:
IBM is the latest big tech firm to prune its headcount as the vendor market continues to pursue AI enterprise spending.
Last week, AWS cut 14,000 positions globally, citing AI as a contributing factor in the reorganization efforts. Microsoft cut about 15,000 staffers this year, which included two significant waves in May and July, in response to marketplace dynamics.
For its part, IBM has been bullish on how AI will affect its headcount. In 2023, CEO Arvind Krishna made waves when, in an interview with Bloomberg, he said the company was pressing pause on hiring for back office roles that could be performed by AI and automation – a number he put at close to 8,000. Krishna later clarified the statements were not suggestive of a layoff but a natural transition over several years.
IBM expects demand for enterprise-grade AI services to keep rising, and is betting on a broad portfolio of offerings to draw in spend.
“We do think we have a differentiated competitive value proposition of a company with an integrated tech stack, plus strategic partnership AI, plus a consulting business at scale with an integral part of IBM client zero that drives distinctive use cases and references,” said SVP and CFO James Kavanaugh, speaking during the company’s Q3 earnings earlier this month.
Kavanaugh also touted having more than 1,000 client engagements on generative AI in the past fiscal year-to-date across the enterprise, software and consulting units.
The company has been adding to the sectorwide downpour of AI tool releases. Last month, it unveiled a vibe coding tool called Project Bob, which includes automated testing and security capabilities. It has also worked to expand agentic AI integrations and pursued small language models for on-premises and edge use cases to feed enterprise appetite.
