IBM to lay off 3,900 employees in latest job cut
IBM is going to cull up to about 3,900 or 1.5 per cent of its global workforce from its headcount of 2,80,000 over missing annual cash target, joining its technology peers including Microsoft which continued with abruptly cutting jobs citing weak growth.
The mass layoff, which is linked to Kyndryl Holdings, the IT services business that IBM spun off last year, and its healthcare divestiture, will incur about a USD 300 million charge, IBM Chief Financial Officer James Kavanaugh said.
Meanwhile, the IBM corporation posted flat sales in the fourth quarter after the strong US dollar hurt its reported revenue by more than $1 billion. In 2022, the hybrid cloud revenue of IBM Corp grew by 11%, to $22.4 billion.
"IBM still expects to hire in the “higher-growth areas”, Kavanaugh said.
According to IBM's forecast, free cash flow in fiscal 2023 is expected to be US$10.5 billion while revenue will increase in the mid-single digits.
Kavanaugh said that IBM is being helped by a weakening US dollar expected in 2023. The effect of currency fluctuations should be neutral overall in 2023 — they’ll drag on results in the first half while becoming a tailwind in the second half, he said.
Arvind Krishna, Chairman and Chief Executive Officer of IBM, said that to bolster the software portfolio, "we invested in hybrid cloud and AI capabilities".
"This year, we'll unlock more productivity, expand our strategic partnerships, and put more investment in specific growth markets. For 2023, we see revenue growth in line with our mid-single-digit model range and about $10.5 billion of free cash flow," said Krishna.
IBM joins a slew of tech companies such as Meta, Alphabet, and others in laying off thousands of employees amid global economic headwinds.