IBM, a US multinational technology company, has become the latest tech giant to slash thousands of jobs. The data giants announced on Wednesday that 3,900 job positions would become void, or 1.5% of its global workforce.
The company explained that this layoff was not due to poor employee performance in 2022 or a fear for the new year, saying they were related to the previously announced sale of two business units. According to a spokesperson, these job cuts will cost IBM about $300 million this quarter.
The units affected by this development are; Kyndryl, an IT infrastructure services business that was officially separated from IBM in November, and IBM’s healthcare analytics business, which an investment firm is in the process of acquiring.
Why IBM is letting 3900 people go
Tech companies across the world have been cutting costs and laying off workers to endure tough global economic conditions and a return to pre-pandemic lifestyles that do not require the kind of internet dependence that the world saw during the lockdown.
While the layoff trend has persisted, IBM has explained that they are not downsizing in response to the gloomy global economic outlook. IBM CEO, Arvind Krishna, expressed utmost confidence in the upcoming year in a call with the CNN on Wednesday.
Tech companies like Alphabet, Google’s parent company made the headlines earlier this month by announcing the layoff of 12,000 employees. Microsoft followed suit with the imminent departure of 10,000 workers
It was disclosed by an IBM spokesman that the company’s evolutions were due to the reorganization of the two businesses units affected and “not an action based on 2022 performance or 2023 expectations.”
The New York-based company also reported mixed earnings Wednesday, with revenue coming in slightly higher than expected but operating profit and free cash flow lower than projected. In hours trade by IBM overnight, its shares slipped with 2%.
IBM CEO, Arvind Krishna was asked about the possibility of tech company evolving in 2023. He replied that most of the company’s clients appeared confident in “emerging stronger”. In business, confidence is important because both parties will be able to serve one another in professional manner.
Furthermore, he told analysts on a conference call “we’re seeing them double down despite “different headwinds in 2023,”
Krishna added that while other tech companies may have reported more downbeat forecasts recently, “the reason that we are remaining in this optimistic frame of mind [is], we have no consumer business.”
However, he rounded up his conference call with the CNN by adding;
“So I think, consequently, we might be seeing a little bit different subset of the economy than those who might have a large direct exposure to a consumer business,”
IBM reported a profit of $2.9 billion in the final three months of last year, some 17 percent higher than the same period in 2021 despite revenue remaining flat at $16.7 billion. The company announced late last year that it will invest $20 billion in semiconductors, quantum computing and other cutting-edge technology in New York state.