International Business Machines Corp. (IBM) has announced plans to cut about 1.5% of its global workforce. The action is to affect 3,900 workers, adding to the thousands of job cuts earlier announced by big tech companies since the beginning of this year. According to the company’s Chief Financial Officer, James Kavanaugh, the cuts will focus on workers remaining after spinning off the Kyndryl and Watson Health units and will cost the company about $300 million. Kavanaugh, however, noted that IBM still expects to hire in the “higher-growth areas.”
Financial result: The jobs cut announcement by IBM came on the heels of the release of its Q4 2022 financial results. According to the company, its Q4 revenue was unchanged at $16.7 billion. Hybrid cloud revenue was $22.4 billion in 2022, up 11% from a year earlier. Sales in the software unit increased 2.8% to $7.29 billion while infrastructure was up 1.6% to $4.48 billion.
- In its forecast, IBM said free cash flow in fiscal 2023 is expected to be $10.5 billion while revenue will increase in the mid-single digits.
Global tech companies at large have been affected by a slowdown in spending as concerns about the economy and a potential recession linger, which has resulted in a wave of recent layoffs. Microsoft Corp., which also announced plans to eliminate jobs, on Tuesday recorded its slowest sales growth in more than six years in its latest quarter as demand for its software and cloud services slowed.
Big layoffs: More than what was recorded last year, the layoffs by tech companies have been coming in large numbers since the beginning of this year. Just last week, Google announced it would slash its workforce by 12,000.
Before that, Microsoft had announced 10,000 job cuts, affecting nearly 5% of its workforce, which followed Amazon’s move to cut 18,000 jobs or 1.2% of its global headcount. Amazon’s and Google’s head cuts surpassed the 11,000 announced by Facebook’s parent Meta, last year, which was then seen as the largest layoffs in the tech industry.
