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IBM Layoffs 2023: Tech major fires 1.5% workforce – Check why it issued pink slips to nearly 4,000 employees – Times Now

IBM layoffs: Tech major fires 1.5% workforce – Check why it issued pink slips to nearly 4,000 employees

Photo : BCCL

Tech giant IBM Corp on Wednesday joined the wave of layoffs that is sweeping through the IT sector as it announced thousands of job cuts. The company said it would lay off 3,900 employees – 1.5 per cent of its global workforce of 260,000.
The tech corp cited the layoffs as part of some asset divestment. In addition to this, IBM also missed its annual cash target and posted flat fourth-quarter revenue due to lackluster demand for its consulting services.

The company anticipates a $300 million charge during the January-March period due to “remaining stranded costs” – which appear to be related to the layoffs. But on Wednesday the company’s chief financial officer, James Kavanaugh, told Reuters that the company would continue to hire in focus areas.

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“Unlike many others over the last 2 to 2-1/2 years that were hiring in tens and thousands of people … we are leveraging digitization, AI automation, that drives efficiency, but we are committed to hiring for client-facing research and development,” he said.

The annual revenue growth projection for the company is in mid-single digits on constant currency terms, weaker than the 12 per cent it reported last year.

IBM also flagged softness in October in new bookings in Western Europe while peer Accenture Plc also noted weakness in its consulting business.

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IBM’s software and consulting business growth also slowed down sequentially in the fourth quarter, still, Kavanaugh said that the company is seeing its consulting business grow in terms of cloud spending with deal signings doubling in 2022 for setting up services with partners such as Amazon’s AWS and Microsoft’s Azure.

Layoffs in IT sector

IT companies at large have been affected by cautious spending by clients and their rising fears of a potential recession which has resulted in a wave of recent layoffs. IBM layoffs come days after Microsoft’s and Google’s announcement of plans to cut jobs.

Last week, Microsoft announced major layoffs, which will affect over 10,000 employees as CEO Satya Nadella hinted that tech companies could face a challenging two years ahead. Google, too, slashed around 12,000 jobs recently, which CEO Sundar Pichai referred to as the “largest round of layoffs in the tech giant’s history”.