IBM and SAP have become the latest tech companies to slash thousands of jobs, as the slowing global economy looks likely to reduce profits.
At US computing and consulting giant IBM about 3,900 positions, or 1.5% of its global workforce, are expected to be cut. Meanwhile, Europe’s largest software firm SAP, which is based in Germany, will reduce its headcount by about 2,800 employees, some 2.5% of its global workforce.
SAP CEO Christian Klein said that the move was part of a restructuring that would allow the company to invest in the areas “where it really matters for SAP to be competitive in the future,” particularly its cloud business.
An IBM spokesperson indicated that the company’s own job cuts were unrelated to wider economic trends. He said they were “not an action based on 2022 performance or 2023 expectations” but were the result of asset divestments. The company did, however, miss its annual cash target.
The spokesperson explained the IBM layoffs were related to the spinoff of the firm’s Kyndryl IT infrastructure business and its healthcare analytics business, which is being acquired by an investment firm.
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The layoffs will cause a $300m charge in the January-March period, the firm said.
Among other large tech-oriented firms that have recently taken steps to slim down are Amazon (18,000 jobs), Google parent Alphabet (12,000), Meta (11,000), Microsoft (10,000), Twitter (3,500), and Spotify (600).
IBM CEO Arvind Krishna said most of the company’s clients appeared confident they would “emerge stronger” and that the company’s lack of exposure to consumer trends would mean it was likely to remain resilient. He said while other tech companies had reported downbeat forecasts recently, “the reason that we are remaining in this optimistic frame of mind [is], we have no consumer business.”
SAP reported that its increased investment into research and development, sales and marketing had affected performance. The firm experienced a 7% year-on-year decline in operating profit in 2022, as it moved to end operations in Russia and Belarus, and collected less revenue from software licenses.
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The US tech sector, which went on a hiring spree during the pandemic, announced 97,171 job cuts in 2022.
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