According to DCD, IBM is planning to cut thousands of jobs in the fourth quarter of 2025, affecting a “low single-digit percentage” of its global workforce of around 270,000 employees. The company reported Q3 2025 revenue of $16.3 billion, up nine percent year-over-year, with software being the largest segment at $7.2 billion. Infrastructure revenue contributed $3.6 billion, up 17 percent, while hybrid cloud including Red Hat grew 14 percent but missed the expected 16 percent target. Following the earnings call, IBM shares dropped around five percent and haven’t recovered. The cuts are part of IBM’s strategic move to focus on its software segment and capitalize on AI and cloud growth opportunities.
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The Real Story Behind the Numbers
Here’s the thing about these “workforce rebalancing” announcements – they’re never just about numbers. IBM is basically admitting that their current workforce isn’t aligned with where they see future growth. And that future is clearly in software and AI, not the legacy infrastructure business that’s still bringing in billions.
What’s really interesting is the timing. They’re posting decent revenue growth – 9% year-over-year isn’t terrible – but the market clearly wasn’t impressed. That 5% stock drop tells you everything you need to know about investor confidence. When you miss cloud growth targets and then announce layoffs in the same breath, it creates a narrative of a company playing catch-up rather than leading.
The Cloud Problem Nobody’s Talking About
Let’s not forget that Q3 cloud outage that affected 10 regions. Sure, they fixed it within two hours, but this follows similar issues earlier in the year. When you’re trying to convince everyone you’re serious about cloud and AI, reliability becomes your most important product. Basically, if enterprises can’t trust your infrastructure, why would they trust your AI solutions?
And that hybrid cloud number missing expectations? That’s particularly worrying because hybrid cloud was supposed to be IBM’s crown jewel after the Red Hat acquisition. Now they’re growing at 14% when they expected 16% – in a market where cloud adoption is still accelerating across the board.
What This Means for IBM’s Future
So where does this leave IBM’s 270,000 employees? The company says US employment will remain “roughly the same” year-over-year, which suggests the cuts might hit international operations harder. But let’s be real – when a company this size starts talking about “low single-digit percentage” cuts, we’re still talking thousands of people’s livelihoods.
The bigger question is whether this is the beginning of a longer transformation. IBM has been trying to reinvent itself for decades now. Remember when they sold their PC business to Lenovo? Or when they pivoted to consulting? Now it’s all about software and AI. But can you really become an AI powerhouse while simultaneously cutting the very talent that might get you there?
I think we’re watching the latest chapter in IBM’s endless reinvention story. The company that once defined corporate computing is still searching for its place in the AI era. And thousands of employees are about to pay the price for that search.
