IBM to lay off 1.5% of its global workforce

IBM Corporation joined the “layoff drive” on Wednesday, when it let go of 3,900 employees, which is 1.5% of its global workforce. The tech hub claimed the layoff drive was associated with asset sales.

CFO James Kavanaugh said the move, which will save the company about $300 million, will primarily affect the employees who remain after the Kyndryl and Watson Health units were spun off. Kavanaugh, however, assured Reuters on Wednesday that IBM would keep hiring in strategic areas.

“Unlike many others over the last 2 to 2-1/2 years that were hiring in tens and thousands of people … we are leveraging digitization, AI automation, that drives efficiency, but we are committed to hiring for client-facing research and development,” he said.

This change will affect IBM’s healthcare analytics business, which is currently being acquired by an investment firm, and Kyndryl, IBM’s IT infrastructure services business, which was officially separated from IBM in November.

Tech companies all over the world have been cutting costs and lay off people in order to deal with the tough global economy and a return to lifestyles from before the pandemic that don’t depend on the internet as much as they did during the lockdown.

IBM has stated that despite the continuing trend of layoffs, they are not downsizing as a result of the bleak forecast for the global economy. The CEO of IBM, Arvind Krishna, spoke with CNN on Wednesday, and he was extremely optimistic about the coming year.

Alphabet, the parent company of Google, made headlines earlier this month when it said it would lay off 12,000 employees. Microsoft also announced that it would lay off 10,000 of its employees.

An IBM spokesperson stated that the company’s changes were “not an action based on 2022 performance or 2023 expectations,” and that they were instead the result of a reorganisation of the two affected business units.

Also on Wednesday, the New York-based company announced mixed earnings, with revenue coming in slightly higher than expected but operating profit and free cash flow lower than projected. IBM saw a 2% drop in overnight trading of its shares.