IBM set to cut jobs amid AI expansion: report
IBM has reportedly told employees that it plans to cut the size of its staff, particularly in the marketing and communications departments. However, there is no word yet on the exact number of workers that will be let go.
In a report by CNBC, the announcement was supposedly made by IBM Chief Communications Officer Jonathan Adashek during a seven-minute meeting with staff.
If news of the impending layoffs proves true, then IBM will be the latest in a long line of tech companies that have already made significant changes to their workforce numbers.
Hedging bets on AI
It is no secret that IBM sees artificial intelligence as the future of its business processing. In December, the company’s chief executive, Arvind Krishna, announced that they were “massively upskilling” their employees on AI. This came just four short months after IBM said they wanted to replace nearly 8,000 jobs with AI.
Before this, the company revealed that it was slashing 3,900 positions from its workforce back in January 2023.
Speaking with CNBC, IBM admitted that it was undergoing a workforce rebalancing charge that would represent a “very low single-digit percentage” of its global workforce. The company said it expects to exit 2024 at roughly the same level of employment as it did at the start of the year.
Whether or not IBM delivers on this projection remains to be seen.
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Navigating the challenges in the tech industry
Despite suffering its fair share of challenges, IBM has started to make a comeback over the past couple of years. The company is once again on its way to growing, though expansion remains muted.
In Q4, IBM saw a 4% increase in revenue compared to a year earlier just as earnings topped the company’s estimates. Even back then, IBM’s Chief Financial Officer James Kavanaugh already talked about a possible workforce rebalancing during an earnings call.
The explosion of AI use in business has turned workplaces upside down. Companies across the world started incorporating artificial intelligence, especially Open AI’s massively popular ChatGPT.
In response, IBM pushed its own WatsonX development studio as a way for businesses to harness the power of machine-learning models. This led to an increase in the number of WatsonX products offered, effectively doubling in size compared to where they were during Q3 2023.
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However, IBM is hardly the only big player in the generative AI space. Rival companies like Amazon, Google, and Microsoft, have all fielded their suite of AI-powered services.
Some observers believe that IBM is even behind the eight ball when it comes to cashing in on its AI products. This is something that the company’s CEO is very much aware of.
“I think that’s a fair criticism, that we were slow to monetise and slow to make really consumable the learnings from Watson winning Jeopardy,” Krishna said.
“The mistake we made was that I think we went after very big, monolithic answers, which the world was not ready to absorb.”
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The reckoning of the tech industry continues
Things are still not looking good for the tech industry at the start of 2024. During the first three months of the year alone, more than 46,000 workers have already lost their jobs, according to Layoffs.fyi. Most of the workforce cuts happened in January when tech giants like Amazon and Alphabet downsized their staff size.
Google announced that it was planning to cut several hundred jobs from its advertising sales team. Before this, the company had already slashed 100 jobs at YouTube.
Meanwhile, Apple was also eyeing a possible shutdown of its 121-person San Diego team that was working on AI features. The iPhone maker reportedly gave workers an ultimatum to relocate or face layoffs.