Multinational technology company IBM has just announced 3,900 job cuts, despite its net income rising by 16% in the last quarter of 2022.
According to an IBM spokesperson, the decision to axe 1.5% of its global workforce was driven by its divestments in assets and missed cash targets rather than weaknesses within the company.
As big tech continues to feel the squeeze, IBM is the latest in a long line of tech businesses that have laid off large portions of their workforce this month, following the likes of Google, Spotify, and Microsoft. Here's what we know so far.
IBM to Lay Off 3,900 Employees
This Wednesday, the New York-based technology company IBM — also known as Big Blue — disclosed its plan to axe 3,900 of its employees.
The announcement was made in a conference call reporting its financial results for the fourth quarter of 2022. In the call, IBM announced that its quarterly revenue targets were exceeded by $300m and that the company's net income rose 16% to $2.71bn.
However, despite smashing revenue targets, the difficult decision to cut personnel stemmed from weak asset sales last year and missed annual cash targets. The company's annual growth projection is also in the mid-single digits, which falls short of the 12% it reported in 2022.
While IBM is making clear efforts to cut costs, the firm is reserving $300 million to cover the costs of employee severance, and hiring efforts will still continue in “client-facing research and development”.
But if IBM — one of two US tech companies to achieve a valuation of over $50bn — can make such ruthless cuts, what does this mean for job stability in the rest of the tech industry?
Tech Layoffs Become the New Normal
After major tech companies ballooned in size throughout the pandemic, the industry's seemingly limitless growth potential is beginning to grind to a halt.
In fact, against the backdrop of rising inflation rates and stalling consumer demand, even the sector's biggest players have been forced to make some very difficult decisions to retain their edge — including Google and Microsoft which have both shed over 10,000 workers each this month.
These cuts aren't confined to Silicon Valley either. From the Portland-based company Vacasa which just let go of 1,300 workers, to Wayfair which just axed 1,750 Boston-based employees, redundancies are taking place from coast to coast.
Unfortunately, this trend isn't unique to 2023, either. For an overview of major companies that have made cuts this year and last, check out our up-to-date layoff guide.