IBM Implements Staff Reductions in Marketing and Communications

IBM recently conveyed to its employees within its marketing and communications division that a reduction in the workforce is imminent, as reported by an insider familiar with the situation. The announcement was made by Jonathan Adashek, IBM’s chief communications officer, in a meeting lasting approximately seven minutes.

This decision follows IBM CEO Arvind Krishna’s statement to CNBC in December 2023, highlighting the company’s significant investment in upskilling employees on AI. This move comes after IBM’s previous announcement last August to substitute nearly 8,000 jobs with AI technology and a disclosure in January last year about cutting 3,900 positions.

During the fourth-quarter earnings report, IBM revealed a workforce rebalancing charge, estimated to affect a small percentage of its global workforce, with expectations to maintain employment levels consistent with those at the beginning of the year.

The technology industry has seen a wave of downsizing in recent times, with 204 tech companies trimming approximately 50,000 jobs this year alone, according to Layoffs.fyi. January particularly stood out with major players like Alphabet, Amazon, and Unity announcing significant job cuts.

Although IBM has experienced some growth in the past few years, its expansion remains modest. Despite a 4% increase in revenue in the fourth quarter compared to the previous year, IBM’s growth remains constrained. CFO James Kavanaugh discussed the need for workforce rebalancing during the earnings call.

IBM has been striving to integrate itself into the burgeoning AI landscape, which has gained significant momentum since the release of ChatGPT by OpenAI in late 2022. In May, IBM introduced WatsonX, a development studio aimed at assisting companies in training, refining, and deploying machine-learning models.

The generative AI and WatsonX product portfolio witnessed a twofold increase in business volume from the third quarter of 2023, according to IBM’s earnings call in January.

However, IBM faces fierce competition in the enterprise AI sector. Giants like Microsoft, Google, and Amazon offer similar solutions, leading to IBM being perceived as lagging in the AI race, particularly in monetizing its products effectively.

Krishna admitted to CNBC in December that IBM had been sluggish in capitalizing on the potential of Watson, acknowledging the company’s pursuit of overly ambitious solutions that the market was not prepared for.

Nearly two years ago, IBM divested its Watson Health unit to private equity firm Francisco Partners for an undisclosed sum, further underscoring its strategic repositioning in the evolving tech landscape.