IBM Corp fired 3,900 people, the company gave this reason

Big Blue spun off its large and backward managed infrastructure business in late 2021 to focus on its hybrid-cloud.

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IBM Corp. IBM on Wednesday laid off 3,900 people as part of asset divestment and cited the reason as it earned flat revenue in the fourth quarter due to a lack of demand for its consulting services. Big Blue is leaving its large and backward managed infrastructure business in late 2021 to focus on its hybrid-cloud, now called Kindril, where it provides customers with its own data centers and leased computing resources. Helps in establishing a combination of It also divested its healthcare data and analytics business from its AI business Watson Health.

IBM said the resulting layoffs could lead to a $300 million charge in the January-March period, but James Kavanaugh, the company’s chief financial officer, told Reuters on Wednesday that IBM would continue to hire in focus areas. Will keep Unlike many others who were hiring tens and thousands of people over the past 2 to 2-1/2 years. Leveraging digitization, AI automation, which drives efficiency, but we remain committed to hiring for client-facing research.

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The company also forecast annual revenue growth in the mid-single digits at constant currency terms, weaker than the 12% reported last year, as the pandemic-led demand for businesses to digitize offset the growing slowdown. The reason has given way to cautious spending by the customers.

Softness seen in new bookings

IBM showed a decline in new bookings in Western Europe in October, while peer Accenture Plc also saw weakness in its consulting business. In November, Cognizant Technology Solutions Corp cut its 2022 forecast due to a pullback in contracts. Still, Kavanaugh said the company continues to see its consulting business grow in terms of cloud spending. Its deal signings doubled in 2022 to set up services with partners such as Amazon.com’s AWS and Microsoft’s Azure.

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Hybrid cloud revenue increased by two percent

IBM said its hybrid cloud revenue rose 2% to $6.3 billion in the quarter ended December 31. Total revenue for the period was $16.69 billion, compared with analysts’ estimates of $16.40 billion, according to Refinitiv. The 110-year-old company, which earns more than half its revenue outside the United States, said it expects a neutral foreign exchange impact on its business this year as the US dollar weakens.