According to CRN, IBM is laying off thousands of employees this quarter, targeting a low single-digit percentage of its 270,000-person global workforce. The cuts are hitting architects, engineers, AI specialists, marketing professionals, and cloud technology workers, with many confirming their departures on LinkedIn. This follows Amazon’s recent 14,000-employee layoff that affected senior program managers and applied scientists. IBM’s spokesperson said the company is “rebalancing” to have the right skills for client needs while maintaining flat U.S. employment year-over-year. The layoffs come after IBM reported strong Q3 revenue of $16.3 billion, up 7% year-over-year, with infrastructure leading growth at 15%.
Krishna’s AI Vision
Here’s the thing: IBM CEO Arvind Krishna has been remarkably transparent about his AI workforce strategy. He’s basically been telling us this was coming for months. At the recent XChange Best of Breed Conference, he argued that AI creates cost efficiency in customer service, programming, and HR – exactly the areas now seeing cuts. But he also claims productivity gains should lead to more employment in certain areas. Remember back in May when he told The Wall Street Journal that AI agents automated the work of hundreds of HR employees? Well, now we’re seeing that play out on a larger scale.
The Productivity Paradox
Krishna’s argument is that more productive companies gain market share, which then creates more work. “If you gain market share because you’re productive, you’re going to actually have more code to do,” he said. So basically, he’s betting that AI will eliminate some jobs while creating demand for others. The company did increase hiring of programmers and salespeople after automating HR work. But here’s the question: are the new jobs going to be as numerous or well-paying as the ones being eliminated? Krishna admits that workers doing repetitive tasks – upwards of 10% of jobs today – are most at risk.
Channel Strategy Shift
Meanwhile, IBM’s channel strategy for 2025 includes increasing the percentage of revenue that comes through partners. That’s interesting timing, isn’t it? As they cut internal technical roles, they’re leaning more heavily on solution providers. IBM Consulting, which ranks No. 6 on CRN’s Solution Provider 500, saw only 2% revenue growth last quarter. So maybe this workforce “rebalancing” is partly about shifting work from employees to partners. It’s a classic cost-cutting move, but one that could strain relationships with the very channel partners they’re counting on for growth.
Bigger Tech Trend
Look, IBM isn’t alone here. Amazon, Google, Dell, Microsoft – they’ve all conducted layoffs this year. We’re seeing a massive industry-wide shift toward AI efficiency and cost optimization. The timing is curious though – these cuts are happening while companies are reporting solid financial results. IBM’s infrastructure business is booming with 15% growth thanks to a new mainframe refresh cycle. So why the layoffs? It seems like they’re preparing for a future where AI does more of the heavy lifting, even if that future hasn’t fully arrived yet. The question is whether this is smart forward-thinking or premature optimization.
