SAN FRANCISCO – International Business Machines (IBM) announced it would eliminate about 1.5 per cent of its global workforce, following similar job cuts the past few months by many of its technology peers.
The reductions will amount to a “ballpark” figure of 3,900, chief financial officer James Kavanaugh said on Wednesday in an interview. The cuts will focus on workers remaining after spinning off the Kyndryl and Watson Health units and will cost the c (S$394 million), he said. IBM still expects to hire in the “higher-growth areas,” Mr Kavanaugh said.
“Unlike many others over the last two to 2½ years that were hiring in tens and thousands of people … we are leveraging digitisation, AI automation, that drives efficiency, but we are committed to hiring for client-facing research and development,” he said.
The company also forecast annual revenue growth in the mid-single digits on constant currency terms, weaker than the 12 per cent it reported last year, as pandemic-led demand for digitising businesses has given way to cautious spending by clients in the face of rising recession fears.
IBM in October flagged softness in new bookings in Western Europe while peer Accenture Plc also noted weakness in its consulting business. Cognizant Technology Solutions Corp in November cut its 2022 forecast due to a pullback in contracts.
Still, Kavanaugh said that the company is seeing its consulting business grow in terms of cloud spending. Its deal signings doubled in 2022 for setting up services with partners such as Amazon.com’s AWS and Microsoft’s Azure.
Its hybrid cloud revenue rose 2 per cent to US$6.3 billion in the quarter ended Dec 31. Total revenue was US$16.69 billion in the period, compared with analysts’ estimates of US$16.40 billion, according to Refinitiv.
The 110-year old company, which makes more than half of its revenue outside the United States, said it expects a neutral foreign exchange impact on its business this year as the US dollar weakens. It booked a forex hit of more than US$1 billion during the fourth quarter. REUTERS, BLOOMBERG