IBM is preparing to cut a “low single-digit percentage” of its global workforce in the fourth quarter of 2025 — a move that could impact several thousand employees worldwide. The decision comes as the company doubles down on its high-margin software and hybrid cloud segments, aiming to capture long-term growth from enterprise AI adoption.
Confirming the layoffs in a statement, the company said, “We routinely review our workforce and at times rebalance accordingly. In the fourth quarter, we are executing an action that will impact a low single-digit percentage of our global workforce.”
The move reflects IBM’s continued transformation under CEO Arvind Krishna, who has steered the company toward software-led revenue streams, particularly through its Red Hat and hybrid cloud business units.
Refocusing on Growth Segments
IBM currently employs about 270,000 workers globally and has spent the last three years divesting low-growth segments while investing heavily in AI-infused cloud services.
Under Krishna’s leadership, the company has prioritized its Software, Consulting, and Infrastructure divisions — positioning software as the primary engine for growth and profitability.
However, IBM’s most recent quarterly results signaled a slowdown in the performance of its cloud software segment. Revenue growth decelerated even as global demand for AI-driven infrastructure surged, leading to increased investor scrutiny over whether IBM can keep pace with competitors such as Microsoft, Google, and AWS in the AI cloud race.
AI and Cloud Realignment
Industry analysts suggest that the layoffs represent IBM’s strategic realignment to streamline operations and fund its transition to AI-first enterprise software.
The company has been heavily investing in Watsonx, its AI and data platform, designed to help enterprises integrate large language models into business workflows.
“IBM’s current challenge lies in balancing its legacy enterprise relationships with the agility required in the AI era,” said a market analyst at Gartner. “These cuts are less about downsizing and more about redirecting talent and capital toward scalable, software-centric growth.”
Limited Impact in the U.S.
While the company confirmed that some U.S. workers will be affected, it also stated that overall headcount in the U.S. will remain roughly stable compared to last year. This indicates that IBM will likely offset job cuts through reassignments and hiring in AI and software divisions.
Shares of IBM — which have risen over 35% in 2025 — dipped slightly by 2% following the announcement, reflecting short-term investor caution amid continued restructuring.
As IBM reshapes its workforce for an AI-driven future, the company’s long-term success will depend on how effectively it transforms from a diversified technology giant into a lean, software-powered enterprise built for the next phase of digital transformation.
