Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research, said the slowdown reflects internal execution challenges. “This change exposes delivery tension within a business unit that is expected to move faster than it currently does,” Gogia said. “While enterprise customers continue to view IBM as a trusted partner in complex environments, the way hybrid cloud is purchased and measured has changed. Organizations are no longer purchasing platforms in isolation. They are purchasing the ability to act quickly.”
Red Hat is central to CEO Arvind Krishna’s strategy of pivoting IBM toward higher-margin software and cloud services. During the earnings call, Krishna said he expects Red Hat to return to “percentage growth in the mid-teens, or near that level, starting in 2026.”
Optimization for efficiency
Gogia said the workforce reduction is designed to streamline operations rather than signal financial difficulties. “Over the past year, IBM redesigned more than seventy internal workflows through automation and artificial intelligence, creating the space to reduce headcount without cutting capacity where it matters most,” he said. “From what we have observed, engineering and delivery teams remain protected.”
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