On Tuesday, IBM informed employees in its marketing and communications group that it is reducing staff size, according to a source.
Jonathan Adashek, IBM’s chief communications officer, made the revelation during a roughly seven-minute meeting with unit staffers, according to the individual, who asked not to be identified because the news has not been made public.
In December, IBM CEO Arvind Krishna told CNBC that the business was “massively upskilling all of our employees on AI,” following an announcement in August to replace roughly 8,000 jobs with AI. IBM said on its results call in January of last year that it was reducing 3,900 positions.
“In 4Q earnings earlier this year, IBM disclosed a workforce rebalancing charge that would represent a very low single digit percentage of IBM’s global workforce, and we expect to exit 2024 at roughly the same level of employment as we entered with,” the company said in a statement to CNBC.
The recent cuts coincide with another round of downsizing in the technology industry. According to the website Layoffs.fyi, around 204 IT companies have lost nearly 50,000 workers this year. January was the busiest month for layoffs since March, with Alphabet, Amazon, and Unity all announcing employment losses.
IBM has resumed growth in recent years, but expansion remains limited. Despite exceeding profitability expectations, revenue climbed 4% in the fourth quarter compared to the previous year. CFO James Kavanaugh discussed workforce balance during the earnings call.
The startup has been attempting to fit into the rising AI narrative, which has been the dominant topic in technology since OpenAI published ChatGPT in late 2022. In May, IBM unveiled WatsonX, a development studio for businesses to “train, tune, and deploy” machine-learning models.
According to IBM’s January earnings call, the book of business for generative AI and Watsonx products has doubled since the third quarter of 2023, when it was in the low hundreds of millions.
IBM confronts fierce competition in the enterprise AI space. Microsoft, Google, Amazon, and others have similar solutions, and IBM has long been perceived as slipping behind in the AI race, particularly in terms of revenue generation.
“I think that’s a fair criticism, that we were slow to monetize and slow to make really consumable the learnings from Watson winning Jeopardy,” Krishna was quoted as saying by CNBC in December. “The mistake we made was that I think we went after very big, monolithic answers, which the world was not ready to absorb.”
Nearly two years ago, IBM sold its Watson Health unit to private equity company Francisco Partners for an undisclosed sum.
