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

IBM will cut roles this quarter, the company said on Tuesday, potentially impacting thousands of employees.

This is as the company shifts focus towards its high-margin software segment, as Wall Street hones in on the company's ability to benefit from AI-linked cloud demand.

"We routinely review our workforce ... and at times rebalance accordingly," the company said in a statement. "In the fourth quarter we are executing an action that will impact a low single-digit percentage of our global workforce."

IBM employed about 270,000 workers worldwide as of the end of 2024. The company said that the percentages would remain essentially flat among US workers.

Some US workers may be affected by the job reductions, but employment in the country is anticipated to remain roughly the same year over year, IBM said.

Under CEO Arvind Krishna, IBM has doubled down on software as it looks to tap into increased spending on cloud services through its "Red Hat" division, as businesses integrate AI technology.

However, IBM last month recorded a slowdown in growth in the key cloud software segment, raising alarm bells among investors betting heavily on Big Blue's ability to benefit more from booming cloud services demand.

Its shares, which have risen over 35% this year, were down close to 2% on Tuesday.

Bloomberg News first reported details about the layoffs earlier on Tuesday.

On Friday, Amazon laid off 14,000 workers, although still only a fraction of Amazon’s 1.55 million total employees.

Amazon CEO Andy Jassy said the cuts were due to the individuals not being “a cultural fit,” denying factors such as costs or artificial intelligence (AI).