IBM’s AI job replacement plan seen as outsourcing shift

NEW YORK, UNITED STATES — IBM‘s ambitious plan to replace thousands of jobs with artificial intelligence (AI) is increasingly being perceived as a move towards outsourcing roles to India rather than achieving full automation.
This perspective comes from several senior technologists within IBM who have shared their insights on the company’s recent layoffs and strategic direction.
AI capabilities lag behind expectations
Despite CEO Arvind Krishna’s announcement last year of replacing approximately 7,800 jobs with AI, insiders argue that IBM’s AI technology is not yet capable of fulfilling this vision.
In an interview with The Register, an anonymous source referred to as Casey highlighted that IBM’s generative AI offering, Watsonx, is significantly behind competitors like OpenAI’s ChatGPT.
“The truth is that Watsonx isn’t even available to employees to attempt to try and help automate some meaningless task,” Casey noted.
Outsourcing over automation
Instead of leveraging AI, IBM appears to be shifting jobs overseas. Sources told The Register that the company is hiring in India while maintaining a hiring freeze in the United States.
This strategy has raised concerns about the loss of seasoned technical talent and organizational competency.
Blake, another insider, expressed worry over the diminishing pool of senior software engineers in the U.S., stating, “No country on Earth is producing new coders faster than old ones retire.”
Infrastructure struggles and workforce reductions
IBM’s infrastructure challenges compound these issues. Casey described outdated network firmware and reliance on temporary contractors in India for maintenance tasks.
These contractors were eventually let go due to performance issues, leaving U.S.-based network engineering staff stretched thin. The workforce reduction has led to a significant decrease in staff per shift for U.S. business hours.
Quiet layoffs raise concerns
Earlier this month, The Register also reported that IBM has been quietly laying off a substantial number of employees. The IBM Cloud, in particular, experienced “a massive layoff” that affected thousands of people.
“Unlike traditional layoffs, this one was done in secret,” an insider said.
Asked to confirm the layoffs, an IBM spokesperson told The Register, “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 job cuts have predominantly affected senior-level employees in their 50s with decades of experience at IBM. This trend has sparked concerns about age discrimination, an issue IBM has faced in past lawsuits.
Despite these challenges, IBM insists it does not systematically discriminate based on age.
A shift in strategy
IBM’s plan to replace jobs with AI seems to be evolving into a strategy focused on cost-cutting through outsourcing.
As the company navigates these changes, questions remain about its ability to maintain technological leadership while managing its global workforce dynamics.