IBM announced a workforce reduction that will affect a low single‑digit percentage of its global workforce, translating to several thousand jobs out of a total of 270,300 employees as of December 31, 2024. The reduction is part of a broader strategy to reallocate resources toward higher‑margin hybrid‑cloud and artificial‑intelligence (AI) businesses, following the company’s 2020 pivot under CEO Arvind Krishna.
The layoffs will target the U.S. infrastructure group, which has historically been a cost‑intensive segment. While the consulting division will also see cuts, the bulk of the workforce reduction is expected to come from infrastructure roles. The decision reflects the group’s mixed performance—its revenue fell 7% in Q3 2024 but rose 17% in Q3 2025—yet the company still views it as a lower‑margin, lower‑growth area compared to its software and AI units.
IBM’s software business, including Red Hat, has driven a 10% revenue increase in Q3 2025, underscoring the company’s focus on high‑growth, high‑margin segments. The shift to hybrid‑cloud and AI is intended to accelerate profitability, as evidenced by a 1.1‑point rise in GAAP gross‑profit margin to 57.3% in the same quarter. The workforce reduction is therefore a cost‑control measure designed to support that margin expansion.
Management emphasized that the action is a routine part of IBM’s workforce review. A company spokesperson said, “We routinely review our workforce through this lens 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.” CEO Arvind Krishna added that the company is “accelerating performance across all segments” and that the AI book of business now exceeds $9.5 billion, reinforcing the strategic rationale for the cuts.
The layoffs signal IBM’s continued commitment to its high‑growth strategy, but they also highlight the company’s need to trim legacy costs. While the reduction may temporarily reduce headcount in legacy segments, the reallocation of talent and capital to software and AI is expected to strengthen IBM’s competitive position in the evolving technology landscape.
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