IBM sheds 3,900 jobs, despite highest revenue growth in a decade

IBM Corp on Wednesday (January 25) said it was shedding 3,900 jobs, related to the divestment of a couple of its business units and lower cash flow. This is despite the fact that the company recorded a revenue growth of 5.5% for 2022, its highest in the past ten years.

IBM is the latest in a string of companies that have cut thousands of jobs due to a slowdown in spending as the global economy prepares itself for a probable recession.

Speaking to Reuters, Chief Financial Officer James Kavanaugh said the company was still committed to hiring for client-facing research and development.

Also read: After Microsoft, Google’s Alphabet to lay off 12,000 employees globally

In an official statement, IBM said that the layoffs were related to the spinoff of its Kyndryl business and a part of AI unit Watson Health. The layoffs are about a 1.4 per cent reduction from its headcount of 2,80,000, according to IBM’s latest annual report.

According to the company, the layoffs would cause a $300 million charge in the January-March period. IBM shares fell 2% in extended trading, as per Reuters reports.

IBM’s 2022 cash flow was $9.3 billion, below its target of $10 billion, due to higher working capital needs. IBM’s cloud business was encouraging in 2022, while its software and consulting business slowed down, especially in the fourth quarter.

The company has forecast annual revenue growth in the mid-single digits for this year, lower than its previous year’s forecast, when there was a lot of demand for digitizing businesses after the pandemic.