International Business Machines (IBM) plans to cut thousands of jobs this quarter as it continues to shift toward faster-growing software and cloud services. The company said the reduction will affect a low single-digit percentage of its global workforce, which totals about 270,000 people. While some U.S. workers may be impacted, overall employment in the country is expected to stay about the same compared with last year.
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IBM said it reviews its workforce on a regular basis and adjusts staffing to match business goals. The company is placing more attention on areas such as cloud tools and AI, which have become integral to its long-term plan.
Focus on Software Expansion
The decision comes as investors grow more confident in IBM’s software business, powered by its Red Hat and HashiCorp divisions. Chief Executive Officer Arvind Krishna has aimed to make this unit IBM’s largest source of revenue. Meanwhile, consulting work has slowed in recent years as companies have held back on spending due to broader economic concerns.
IBM shares have climbed in 2025 as the market responds to its stronger software focus and steady demand for digital services. The company said it remains committed to balancing staff changes with hiring in new areas that support future growth.
IBM Reports Strong Q3 Results
This news comes two weeks after the company reported another solid quarter, showing a 7% rise in revenue for Q3 2025, its highest growth in several years. The gains were driven by stronger demand in software, automation, and AI. Software revenue alone grew 9%, helped by a 22% jump in automation projects. Infrastructure also posted a 15% increase, supported by the z17 platform.
Consulting returned to growth, up 2%, as clients renewed spending on AI and software services. IBM generated $7.2 billion in free cash flow during the quarter, marking its best third-quarter result in nearly two decades. The company also raised its full-year outlook, expecting over 5% growth in revenue and about $14 billion in free cash flow for 2025.
The upbeat results highlight IBM’s steady move toward software and digital services, setting a solid tone as it continues to streamline its workforce and focus on higher-margin business areas.
Is IBM a Buy or Sell?
The Street’s analysts give IBM a Moderate Buy consensus rating, with an average IBM stock price target of $295.18. This implies a 1.88% downside from the current price.
