The latest company to join the Big Tech mass firing trend is IBM, who has cut nearly 4,000 jobs after missing its annual cash target.
This week, the computer company announced that it would be laying off 3,900 individuals, which amounts to around 1.5 percent of its workforce. These cuts are estimated to lead to a $300 million charge during the January to March period.
Although it sounds like a very large cut, the fact that the company’s shares fell 2 percent following the news prompted some analysts to conclude that investors wanted to see bigger cost-cutting measures.
Investing.com Senior Analyst Jesse Cohen said: “It seems as if the market is disappointed by the size of its announced job cuts, which only amounted to 1.5 percent of its workforce.”
The company’s cash flow for 2022 was $9.3 billion, which was well below its $10 billion target and stemmed from working capital needs that were higher than expected. In addition, their forecasted annual revenue growth fell below the 12 percent that was reported last year.
IBM has seen its software and consulting business’s growth slowing down, although there were some positive movements in cloud spending, with its hybrid cloud revenue climbing 2 percent during the quarter that ended on December 31.
However, a spokesperson for IBM told CNN that the cuts were related to the reorganization of two business units and were “not an action based on 2022 performance or 2023 expectations.” The affected units were their IT infrastructure services business Kyndryl and their healthcare analytics business, which is being acquired by an investment firm.
IBM CEO Arvind Krishna noted that the company’s lack of a consumer business gives them confidence, saying that most of their clients expect to “emerge stronger.”
“So I think, consequently, we might be seeing a little bit different subset of the economy than those who might have a large direct exposure to a consumer business,” he noted.
IBM joins other Big Tech names in laying off thousands of workers
The layoffs at IBM are just the latest in a series of similar announcements from major tech firms like Microsoft, Google and Amazon. Earlier this week, the music streaming service Spotify announced that it would be culling 6 percent of staff, which amounted to 600 jobs, as its advertisers reduce their spending. The move will see them take on $38 million in charges related to severance.
Earlier this month, Microsoft began laying off 10,000 employees in the face of the current economic climate and slowing customer demand. These layoffs impacted 5 percent of the company’s global workforce and followed a previous round of layoffs that affected 1000 employees across different divisions last year.
CEO Satya Nadella wrote in a company memo: “We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one.”
Last week, Alphabet, the parent company of Google, announced that it would be cutting 12,000 jobs in a brutal round of layoffs that are expected to affect its engineering, products and recruiting teams.
Retail giant Amazon, meanwhile, announced layoffs that will affect more than 18,000 jobs at the company, and Facebook parent company Meta said it would be cutting more than 11,000 employees, or 13 percent of its workforce, last November in the face of rising costs and a weak advertising market.
Rideshare firm Lyft recently laid off 13 percent of its workforce, while cloud software company Salesforce cut 10 percent of its workforce, which amounted to 8,000 workers, due in part to over-hiring during the pandemic.
Apple is one of the few tech companies that has yet to announce major layoffs, but their CEO, Tim Cook, announced that they have been slowing their hiring.
Source: IBM announces 3,900 layoffs as Big Tech financial struggles continue