IBM wants to cut 3900 jobs combined with strategic realignment

IBM wants to cut 3,900 jobs, combined with strategic realignment

IT giant IBM will cut around 3,900 jobs, or just over 1% of its workforce, as part of a layoff plan linked to its strategic realignment, a source familiar with the matter told AFP on Wednesday.

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Armonk (New York State) made no explicit mention of these job cuts in its earnings press release issued Wednesday or during its earnings conference call.

Those responsible only mentioned a special charge of 300 million dollars, which according to the source corresponds to the costs of the social plan.

Those costs “are entirely related to the Kyndryl split and the sale of the healthcare business,” a spokesman told AFP. “These actions were not taken based on 2022 performance or 2023 projections,” he said.

In 2021, IBM spun off its information systems consulting and maintenance activities from the rest of the group, one of the company’s historic branches but less vibrant than remote computing (cloud) in which it has invested heavily.

The new company resulting from this demerger was called Kyndryl and went public in November 2021.

The activity related to the collection and analysis of data in the medical field, which was part of the Watson Health division, was sold to the investment company Francisco Partners in early 2022.

According to the source, if the positions affected by the social plan remained in IBM’s bosom after these two separations, they are functions related to these two activities.

IBM on Wednesday released slightly better-than-expected fourth-quarter revenue and net income in line with analysts’ forecasts.

During the earnings call, Chief Financial Officer James Kavanaugh indicated that it was “cautious” to expect growth at the lower end of the group’s usual range.

In after-hours electronic trading on Wall Street, IBM shares fell nearly 2%.

Amazon, Meta, Microsoft and Alphabet (Google) have all recently embarked on sweeping layoff plans after increasing hiring during the pandemic to meet increased demand for digital services.