IBM is planning to lay off several employees this year, with sources saying the total number of layoffs will be a very small percentage of the company’s overall workforce.
The job cuts are however expected to affect less than one percent of IBM’s 340,000 plus employees, which would bring the expected number of those to exit the company to about 1,700 workers.
According to a statement by a company spokesperson quoted by CNBC, the move is in line with IBM’s push to reposition its team as it looks to focus more “on the high-value segments of the IT market.”
The spokesperson also noted that while some employees are being let go, the company will be hiring more in “critical new areas” deemed to offer value to clients as well as to IBM. Notably, the firm’s jobs page has openings for 7,705 positions.
Layoffs at the company are coming at a time it is looking at finalizing an acquisition of a major industry player. At the moment, IBM is closing in on a deal to acquire Red Hat. The deal to buy the open-source software firm is expected to cost IBM about $34 billion and should be finalized within the second half of the year.
IBM already owns a public cloud infrastructure that enables the deployment of applications, However, experts concur that acquiring Red Hat would give IBM an opportunity to wrestle business from other companies that use public clouds.
Such companies include Amazon Web Services (AWS) and Microsoft Azure, incidentally platforms that control a larger market share.
Red Hat, which had a total of 13,360 employees at the end of February, will boost IBM’s capabilities and widen its customer reach, according to Everscore ISI analysts Irvin Liu and Amit Daryanani.
IBM shares have gained 16% since the start of the year. However, its first-quarter revenue was 5% down in year over year returns as announced in April.
The last major job cuts at the company were in 2016 and 2017.