IBM cuts 3,900 jobs after muted consulting demand hits quarterly revenue

IBM Corp on Wednesday said it would lay off 3,900 people as part of a divestment of some assets and posted flat fourth-quarter revenue due to lackluster demand for its consulting services.
In late 2021, Big Blue spun off its slow and large managed infrastructure business, now known as Kyndryl, to focus on the hybrid cloud, which helps customers set up the complex their own data centers and leased computing resources. It also divested from the healthcare data and analytics business from the AI ​​Watson Health business.
IBM said the layoffs would result in a $300 million charge between January and March.
But the company’s chief financial officer, James Kavanaugh, told Reuters on Wednesday that IBM would continue to hire in key areas.
“Unlike many other companies that in the last two to two and a half years have employed tens of thousands of people… we are leveraging the digitization, automation of AI to drive efficiency, but we are committed to it,” he said. recruiting for customer-oriented research and development,” he said.
The company also forecasts single-digit annual revenue growth in constant currency terms, lower than the 12% it reported last year, driven by the need to digitize the business. The pandemic has given way to cautious consumer spending in the face of an economic downturn that has increased fear.
IBM in October marked weakness in new bookings in Western Europe while peer company Accenture Plc also recorded weakness in its consulting business. Cognizant Technology Solutions Corp in November cut its 2022 forecast due to contract withdrawals.
However, Kavanaugh says the company is seeing its consulting business grow in terms of cloud spending. Its deal-making contracts doubled in 2022 to set up the service with partners like’s AWS and Microsoft’s Azure.
Its hybrid cloud revenue grew 2% to $6.3 billion in the quarter ended December 31. Total revenue was $16.69 billion for the period, compared with analyst estimates volume is $16.40 billion, according to Refinitiv.
The 110-year-old company, which generates more than half of its revenue outside the US, said it expects a neutral foreign exchange impact on its business this year as the US dollar weakens. It placed a forex hit of more than $1 billion in the fourth quarter.


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