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 confirmed the cuts in a November 4 statement, noting they “routinely review our workforce” and “rebalance accordingly.” This comes shortly after IBM reported Q3 2025 revenue of $16.3 billion, up nine percent year-over-year, with software being the largest segment at $7.2 billion. Despite the strong numbers, IBM shares dipped around five percent following the earnings call and haven’t recovered. The company experienced a cloud outage during the quarter that affected 10 regions, though it was resolved within two hours.
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The Software Pivot
Here’s the thing about these cuts – they’re not about cost-cutting in the traditional sense. IBM is explicitly shifting focus toward its software business and trying to ride the AI and cloud wave. Their software segment already brings in $7.2 billion, making it their largest revenue driver. But the hybrid cloud growth, including Red Hat, came in at 14 percent – below the expected 16 percent. That might not sound like much, but in the hyper-competitive cloud space, every percentage point matters.
What “Rebalancing” Really Means
IBM calls this “rebalancing” their workforce, which is corporate speak for shifting resources from slower-growing areas to high-potential ones. The spokesperson told Bloomberg that US employment should remain roughly the same year-over-year, which suggests they’re cutting in some departments while hiring in others. Basically, they’re playing musical chairs with jobs – some positions disappear while new ones emerge in different parts of the company. It’s the classic tech industry maneuver of chasing the next big thing while trimming what’s no longer strategic.
The Bigger Picture for Tech
Look, this isn’t just an IBM story – it’s becoming the playbook for legacy tech companies trying to stay relevant. They all want to be AI and cloud companies now, even if that means shedding thousands of jobs that don’t fit that vision. The timing is interesting though – doing this while posting solid revenue growth suggests they’re not in panic mode. They’re making a calculated bet that doubling down on software will pay off bigger than maintaining their current mix. But can a company with 270,000 employees really pivot that quickly? That’s the billion-dollar question.
What Comes Next
So where does this leave IBM? They’re clearly betting the farm on software and AI, but they’re doing it while dealing with cloud reliability issues and investor skepticism. The stock dip after decent earnings tells you everything – the market wants to see faster growth in the strategic areas. These job cuts might help streamline operations, but they won’t solve the fundamental challenge of competing with cloud-native players who don’t have decades of legacy business to manage. The next few quarters will show whether this “rebalancing” actually repositions IBM for the AI era or just trims the sails on a ship that’s struggling to change course.
