IBM Announces First Job Cuts To Its Workforce Under New CEO Arvind Krishna

Tech giant, IBM has announced it's laying off an unspecified number of workers in at least five states across the United States. While IBM didn't disclose how many employees it will let go, a MarketWatch report shows that it is likely to be in the thousands. At the end of 2019, IBM had over 350,000 full-time employees.

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"IBM's work in a highly competitive marketplace requires flexibility to constantly add high-value skills to our workforce. While we always consider the current environment, IBM's workforce decisions are in the interest of the long-term health of our business," IBM spokesman Ed Barbini said in a statement. "Recognizing the unique and difficult situation this business decision may create for some of our employees, IBM is offering subsidized medical coverage to all affected U.S. employees through June 2021."

Some are suggesting the layoffs come down to the company's new CEO, Arvind Krishna, whose plans for the company could demand budget cuts in certain areas following the impact of COVID-19. Krishna took joined the company as CEO in April, inheriting both the pandemic and the company's ongoing struggle with growth. Its share price has remained the same as ten years ago, while other tech companies experience rapid growth.

Meanwhile, an anonymous IBM staffer revealed to The Register that the cuts were a part of a "pivot" towards the cloud. A post in the Watching IBM Facebook group, which is following layoffs at the company, has shown a reduction in workers in the cloud and cognitive software teams. In addition to this, entire departments like the Global Technology Services (GTS) wing were let go, and the Global Business Services (GBS) team has lost a lot of its team. The Register also reported that staff have been given 30 days of notice and 90 days of severance pay.

Though, IBM says job cuts have been on the table for a while. On two of its fourth-quarter 2019 and first-quarter 2020 earnings calls, the company stated it could benefit from making structural changes to optimize cost savings.

IBM joins a growing list of tech companies cutting jobs since the coronavirus pandemic caused an economic downturn. This includes Hewlett Packard, which recently announced it was cutting its workforce as it aims to save a billion dollars by 2021. Uber has also shed a quarter of its employees.