IBM Plans Major Job Cuts as It Shifts Focus to Software and AI

IBM has revealed plans to lay off thousands of employees in the fourth quarter of 2025 as the tech giant shifts its focus more towards software, artificial intelligence, and cloud services. These layoffs, which are said to impact a “low single-digit percentage” of its global workforce, are part of a broader strategy to streamline operations and reallocate resources to areas with higher growth potential.

The company currently has about 270,000 employees around the globe, which means that the planned job cuts could impact several thousand positions. Although IBM has not detailed which regions or departments will be affected, it is anticipated that the reductions will mainly target roles related to its legacy IT services and infrastructure operations areas that have been growing at a slower pace compared to its software and AI divisions.

In a recent statement, IBM shared that this decision is part of their ongoing strategy to “rebalance the workforce” and better align their talent with the company’s changing business priorities. This isn’t being seen as a hiring freeze or a mass layoff; instead, it is a strategic move aimed at bolstering IBM’s position in the competitive enterprise software market.

Under the leadership of CEO Arvind Krishna, IBM is going through a significant transformation. The company is shifting its focus from lower-margin hardware and consulting services to prioritize hybrid cloud platforms, software development, and AI-driven solutions. A big part of this strategy hinges on the success of its Red Hat acquisition, which has become a crucial element in driving IBM’s hybrid cloud business forward. As the company places more emphasis on software, it mirrors a larger trend in the tech industry, where firms are adapting to the rising demand for digital transformation tools and cloud-based infrastructure.

Despite making steady strides in its software division, IBM has been under pressure to boost its profitability and cut costs. The recent changes to the workforce are aimed at optimizing resources, reducing redundancy, and positioning the company to seize growth opportunities in data, analytics, and enterprise AI. IBM has assured that those impacted by the layoffs will receive support, including severance packages and access to job placement assistance.

Analysts see this move as part of IBM’s ongoing journey to modernize and streamline its operations. The company has already separated its managed infrastructure services division, now called Kyndryl, and shifted its focus towards software-driven growth. Although these steps have helped boost margins, IBM’s overall revenue growth has been somewhat limited, highlighting the need for even greater operational efficiency.

The market’s reaction to the announcement was cautious, with IBM shares dipping a bit in early trading as investors took a moment to evaluate the effects of the restructuring. Still, many view the layoffs as a sensible move to maintain competitiveness in an industry that is being transformed by automation, AI, and cloud adoption, all of which are changing the landscape of workforce needs.

The recent job cuts at IBM reflect a larger trend in the global tech industry, where major companies are reducing their workforce to focus more on AI and software development. As IBM gears up for the next stage of its transformation, the goal is to become leaner and more agile, positioning itself to provide top-notch software solutions to its enterprise clients.

In the coming months, IBM plans to share more details about its restructuring strategy, including which regions and business units will be impacted. This decision sends a strong message from the company’s leadership: IBM is focusing its future growth on software, AI, and cloud technologies, rather than the legacy services that once shaped its identity.