IBM Plans to Cut Thousands of Jobs as It Sharpen Focus on Software Growth

IBM has announced plans to reduce its workforce by a “low-single-digit percentage” in the fourth quarter of 2025. The move comes as the company shifts its strategic emphasis towards high-margin software and cloud-services businesses—particularly its Red Hat unit—and away from legacy consulting and infrastructure operations.

According to the statement, IBM will execute the workforce adjustment globally and expects it to affect “thousands” of employees, though exact numbers were not disclosed. The company emphasized that U.S. employment levels are anticipated to remain roughly flat year over year. The job cuts follow a reported slowdown in growth for its cloud-software segment, which has prompted investor concern about IBM’s ability to capitalise on booming demand for AI-driven services.

Analysis / Impact:
This announcement highlights a critical juncture for IBM as it attempts to reposition itself in the evolving technology landscape. The pivot toward software and cloud services aligns with market expectations for higher growth and margins, but the transition poses both opportunity and risk.

On the opportunity side, focusing on software—especially cloud, AI and services derived from Red Hat’s hybrid-cloud platform—matches industry trends and may help IBM capitalise on enterprise demand for scalable, modern infrastructure. At the same time, trimming the workforce can free up resources, reduce overhead and improve efficiency.

On the risk side, large-scale layoffs carry cultural, operational and reputational implications. Delivering consistent growth in the software unit during a slowdown in cloud expansion will test IBM’s agility. Investors will be watching not only cost actions, but whether IBM can accelerate its high-margin segments enough to offset weakness in consulting or infrastructure.

For employees and the wider industry, the move signals that even long-established tech firms are under pressure to adapt quickly. As companies prioritise software over hardware and services, workforce strategies will increasingly reflect those shifts.

In summary, IBM’s job-cut announcement is a tangible sign of change: the company is betting on software-centric growth as its future, but execution and market response will determine whether the gamble succeeds.