IBM has apparently begun layoffs of as many as 8,000 people — layoffs that were announced back in January. But those layoffs are avoiding the age-related criticisms of IBM’s past and are also too early to reflect the IBM-promised generative artificial intelligence (genAI) layoffs, according to Jason Andersen, a former IBM manager who today serves as VP/principal analyst at Moor Insights & Strategy.
Andersen said his overall take on the layoffs is that “it was a bit of a yawn,” given IBM’s January announcement and Big Blue’s recent workforce reduction efforts. “IBM has used this tactic of kind of quietly laying people off for many, many years,” said Andersen, who spent more than eight years as a senior product manager at IBM, leaving in 2008. He works with IBM today as an analyst.
The initial report of the layoffs came from a story in The Register and was reinforced in various discussion forums.
IBM spokesperson Sarah Minkel emailed a rather vague statement to Computerworld that seemed to confirm the layoffs: “Early this year, IBM disclosed a workforce rebalancing charge that would represent a very low single digit percentage of IBM’s global workforce, and we still expect to exit 2024 at roughly the same level of employment as we entered with.”
The Register did some quick math, based on IBM’s global employment numbers. “With about 288,000 employees worldwide at the end of 2023, the ‘very low single digit percentage’ possibilities for 2024 might be 1 percent (2,880 layoffs), 2 percent (5,760 layoffs), 3 percent (8,640 layoffs), or more,” the Register story noted.
It also noted, “last year, CEO Arvind Krishna said IBM expected to replace around 7,800 jobs with AI, though no specific time frame was provided.”
Andersen said that the AI reference was to generative AI, and that it was far too early to have IBM layoffs due to that. “Is it genAI? I don’t buy it. it’s a little too far ahead now. Maybe two years from now,” he said. He estimated that such IBM genAI layoffs wouldn’t happen until late 2026.
Andersen couldn’t directly confirm that these are the layoffs that IBM talked about in January, but he has seen anecdotal evidence that the layoffs have happened.
Over the last few months, he said, “I have seen twice as many people leaving IBM for whatever reason than the previous six months. And IBM is not the only one doing this.”
Andersen stressed that he seriously doubts that IBM is doing anything that will get them into trouble with age- or gender-related issues.
“IBM doesn’t necessarily look at it demographically. They look at it functionally in terms of individual contributors in a group versus managers — explicitly, because IBM has been called out on this this so many times, there are a number of reviews to prevent any type of -ism,” Andersen said. Sometimes he has seen the company go in the opposite direction. “Maybe this person is a poor performer, but they may get a second chance because it might possibly be seen as ageism or sexism.”
He sees many of the layoffs as related to cloud cutbacks, as enterprises rebalance their on-prem versus cloud environments. Many enterprises, he said, went too far into the cloud at the beginning of the pandemic in 2020.
That’s where the definition of ‘AI’ comes into play. Today, most AI workforce reduction references involve genAI. But he does see some of the cloud reductions being driven by greater efficiencies due to IT automation and automated IT operations. Given that much of the sophisticated automation at IBM is leveraging other forms of AI, most likely machine learning, one could say that AI is a little bit involved in these layoffs — just not genAI.
Symbol Zero CEO Rafael Brown said that IBM was one of many companies that over hired during the start of the pandemic, and this is a correction. Back in 2020, IBM “anticipated, they made some guesses, and they were wrong. If they hired slower, as Apple did, they wouldn’t be cutting back as much as they are,” Brown said.
Brown said that another factor that is playing into this situation is the return to offices movement, and the move away from remote sites including home offices.
“Large tech companies are boiling the frog on return to work,” Brown said, “and creating a culture of fear that if you don’t come back in, you’re going to get laid off.”
Some of this may also be manipulative, he said, suggesting that CEOs are hoping that a demand for five days in the office will encourage people to quit, which is a lot cheaper than having to lay them off.
“My kudos for Nvidia that they haven’t pushed people back into offices,” Brown said, adding that Nvidia is hiring away a lot of the people who were pushed into return to the office at other high tech companies. But, ironically, he said, Nvidia is finding that a lot of the managers they are hiring are themselves insisting on workers returning to the office.
