IBM joins the wave of technological layoffs with a cut of about 3,900 jobs

IBM is the latest of the big technology companies to join the wave of layoffs that is shaking the sector. The company, which has presented closing results for 2022 with an increase in revenue of 5.5%, up to 60,530 million dollars and a drop in profits of 71%, up to 1,639 million, due to an extraordinary charge for pensions , is preparing to cut 1.5% of its workforce.

The financial director, James Kavanaugh, has declared on Wednesday in an interview cited by Bloomberg that the cuts will amount to an “approximate” number of 3,900 people. The cuts will focus on workers left after the spin-off of the Kyndryl (technology infrastructure) and Watson Health (healthcare) units. The layoffs will cost the company about $300 million. IBM is still looking to hire in the “highest growth areas,” Kavanaugh has said.

“Our strong performance in the fourth quarter capped a year in which we grew revenue above our mid-single-digit model. Customers in all geographies have increasingly adopted our hybrid cloud and artificial intelligence solutions as technology continues to be a differentiating force in today’s business environment,” said Arvind Krishna, company president and CEO. in the results statement. “Looking ahead to 2023, we expect full-year revenue growth consistent with our mid-single-digit model,” that is, 5%, he added.

IBM expects free cash flow this year to be $10.5 billion. Both revenue growth and cash generation are above the forecasts made by analysts.

The company based in Armonk (New York) has seen its revenue slow down in the fourth quarter, which remained at 16,690 million dollars, 5 million less than the previous year, mainly due to the strength of the dollar, which makes the Earnings in other currencies translate to a smaller amount when converted to US currency. Revenues from the main divisions (software, consultancy and infrastructures) grew and other revenues weighed down the total.

Krishna has been trying to reorient Big Blue away from its traditional IT infrastructure and services business towards the fast-growing market of cloud computing, which has become the engine of revenue. Hybrid cloud revenue was $22.4 billion in 2022, up 11% from a year earlier (and 17% excluding currency impact).

Alphabet, the parent of Google, will cut around 12,000 jobs worldwide, a figure close to 6% of the workforce, to address weakening economic conditions. Microsoft has announced the cut of about 10,000 jobs and at the beginning of the year Amazon raised its layoff figure to about 18,000 workers. Last year, Meta announced a workforce cut of 11,000 people. Of the five largest technology companies, only Apple has so far escaped a massive downsizing.