IBM notified several thousand employees this week that they were being laid off, marking a significant workforce reduction announced on Tuesday. The company stated it will eliminate “a low single-digit percentage” of its 270,000-person global workforce during the fourth quarter. Workers have 30 days to find alternative positions within IBM or face termination with severance pay.
Strategic Shift to High-Growth AI Markets
The layoffs reflect IBM’s strategic decision to focus on high-growth areas including AI consulting and software solutions. IBM’s AI business has experienced explosive growth, with the company’s CFO Jim Kavanaugh noting that approximately 80% of their AI consulting and software clients in the past six months were new to the company. In the third quarter alone, IBM’s bookings for AI consulting and software surged to $9.5 billion, representing a $2 billion jump from the second quarter.
Strong Financial Performance Amid Restructuring
Despite the layoffs, IBM reported impressive financial results for Q3 2025, with $16.3 billion in revenue—a 9% increase year-over-year. The company posted profits of $1.7 billion for the quarter, compared to a net loss of $330 million during the same period last year. CEO Arvind Krishna emphasized the “strength” of IBM’s AI business in earnings statements.
While some U.S.-based roles will be affected, IBM anticipates maintaining flat year-over-year U.S. headcount overall. The company currently has 366 open job postings in the U.S., ranging from senior software developers to business development executives. This restructuring aligns with industry trends, as other tech giants including Amazon and Oracle have announced significant layoffs recently.