On Tuesday, IBM informed employees in its marketing and communications division that it would be reducing the size of its staff, as reported by a source familiar with the situation.

According to the source, IBM's chief communications officer, Jonathan Adashek, announced during a seven-minute meeting with unit staff, who requested anonymity because the news has not been officially disclosed.

IBM's Reduction in Several Departments

IBM has been open about its recent staff reduction plans and was seeking voluntary severance from employees, especially in divisions such as enterprise operations and support, Q2C, finance, and operations, which includes communications and marketing.

Last month, IBM announced that the voluntary layoffs were part of its effort to balance its workforce. It would affect a very small percentage of its global workforce to maintain a similar level of employment this year as it had at the start of the year.

IBM Extensively Leveraging on AI 

In December, IBM CEO Arvind Krishna told CNBC that the company was extensively training all employees on AI, following an August announcement to replace nearly 8,000 jobs with AI. On its earnings call in January of the previous year, IBM stated that it was eliminating 3,900 positions. 

In the fourth quarter earnings earlier this year, IBM revealed a workforce rebalancing charge that would affect a very small percentage of IBM's global workforce and anticipates ending this year with approximately the same level of employment as at the beginning, per a statement IBM told CNBC. 

The recent cuts coincide with another wave of downsizing in the tech sector, according to Layoffs. FYI, around 204 tech companies have cut nearly 50,000 jobs this year, including Alphabet, Amazon, and Unity, all of which announced job cuts in January. 

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IBM Aligning with The Growing AI Trend

IBM has seen some growth in the last few years, but expansion has been slow. Revenue in the fourth quarter rose by 4% compared to the previous year, even though earnings were higher than expected. CFO James Kavanaugh discussed workforce rebalancing during the earnings call.

The company has been striving to align with the growing AI trend, which has been prominent in the tech industry since the launch of OpenAI's ChatGPT in late 2022. In May, IBM introduced WatsonX, which is described as a development studio for companies to train, fine-tune, and implement machine-learning models.

During its earnings call in January, IBM reported that the book of business for generative AI and WatsonX products doubled from the third quarter of 2023 when it was in the low hundreds of millions.

IBM encounters strong competition in the enterprise AI field, especially against companies like Microsoft, Google, Amazon, and others that offer similar services. IBM has often been seen as lagging behind in the AI competition, particularly regarding product profitability. 

Krishna told CNBC in December that it is a fair criticism to say IBM was slow in making money from and simplifying Watson's insights. He admitted they made a mistake by focusing on large, complex solutions that the market was not ready to absorb. 

Almost two years ago, IBM sold its Watson Health unit to private equity firm Francisco Partners for an undisclosed sum.

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