International Business Machines Corp. (IBM) plans to eliminate thousands of jobs in the fourth quarter of 2025 as part of a workforce rebalancing focused on artificial intelligence and cloud computing. The company, with roughly 270,300 employees globally at the end of 2024, indicated the cuts would affect a low single-digit percentage of its staff, potentially impacting 2,700 to 8,100 roles. This step aims to match skills with client demands in expanding fields, while IBM continues hiring in priority areas.
Strategic Shift Under CEO Krishna
Arvind Krishna, IBM’s CEO since 2020, has steered the company toward high-margin markets such as AI consulting and software. This includes spinning off legacy tech services into Kyndryl in 2021 to concentrate on cloud and AI. A spokesperson noted that IBM regularly evaluates its workforce to adapt to market changes and rebalances as needed. While U.S. employees bear much of the impact, total U.S. headcount should remain unchanged year-over-year, with some effects in Canada.
Details of the Layoffs
The reductions primarily hit cloud infrastructure, back-office, and human resources functions, where AI and automation take over routine tasks. This follows earlier cuts, including around 8,000 roles in May 2025. IBM’s 2019 acquisition of Red Hat for $34 billion bolsters its hybrid cloud offerings, integrating AI capabilities. Affected workers get severance packages, though exact costs are not public.
Financial Performance and AI Growth
Recent results show progress: Third-quarter 2025 revenue climbed 9% to $16.33 billion, surpassing estimates, fueled by hybrid cloud and AI demand. AI bookings reached $9.5 billion, with 80% from new clients in the last six months. CFO Jim Kavanaugh highlighted growing AI uptake by enterprises in an earnings call. However, a dip in cloud software growth raised investor flags, prompting the rebalancing.
Broader Industry Context
IBM’s actions echo moves by Amazon, Microsoft, and Google, which have slashed jobs to fund massive AI investments. Jefferies analysts view the robust AI demand as a bullish indicator for IBM’s trajectory. These changes stem from economic pressures and the high costs of AI development.
Implications for Workers and the Future
This rebalancing underscores the push for AI and automation skills in the job market. IBM positions itself to gain ground in competitive AI services through efficiency gains. As the firm rolls out the plan, stakeholders monitor its effects on morale and performance.
