IBM to cut thousands of jobs in fourth quarter amid software focus

IBM announced on Tuesday that it will be cutting roles in the fourth quarter, potentially impacting thousands of employees as the company shifts its focus towards its high-margin software segment. This move comes as Wall Street closely watches IBM’s ability to benefit from the increasing demand for AI-linked cloud services.

In a statement, IBM stated, “We routinely review our workforce and at times rebalance accordingly. In the fourth quarter, we are executing an action that will impact a low single-digit percentage of our global workforce.” This decision is part of IBM’s strategy under CEO Arvind Krishna to double down on software, particularly through its “Red Hat” division, to capitalize on the growing spending on cloud services as businesses incorporate AI technology.

Despite these efforts, IBM recently experienced a slowdown in growth in the key cloud software segment, causing concern among investors who have been banking on the company’s success in the booming cloud services market. As a result, IBM’s shares, which have seen a 35% increase this year, were down nearly 2% on Tuesday.

Currently, IBM employs approximately 270,000 workers globally. While some U.S. workers may be affected by the job cuts, IBM reassured that overall employment in the country is expected to remain stable year over year. Bloomberg News was the first to report details about the impending layoffs earlier on Tuesday.

As IBM navigates these changes, the company continues to strive towards innovation and growth in the competitive tech industry. With a renewed focus on software and cloud services, IBM aims to position itself as a leader in the evolving tech landscape.

This article was originally reported by Arsheeya Bajwa and edited by Alan Barona.