IBM and Artificial Intelligence: From planned job cuts to unexpected growth – Image: Xpert.Digital
A double-edged sword: IBM and the future of artificial intelligence
Artificial Intelligence at IBM: Winners and Losers of a Transformation
The story of artificial intelligence at IBM exemplifies how technological transformations often take unexpected turns. What began as an announcement of massive job cuts evolved into an example of the complex and multifaceted impact of AI on the world of work – a double-edged sword with winners and losers.
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The original announcement: 7,800 jobs at risk
In May 2023, IBM CEO Arvind Krishna made headlines with a remarkable announcement: The company would be imposing a hiring freeze for certain administrative roles and planned to replace approximately 30 percent of its back-office positions with artificial intelligence within the next five years. Of a total of 26,000 affected positions, Krishna specifically mentioned that around 7,800 jobs could be eliminated through AI and automation.
Departments without direct customer contact were particularly affected, especially human resources. The strategy involved not filling vacant positions – for example, due to retirements – in order to avoid layoffs. Krishna explained that the focus was on automating routine tasks, such as parts of the onboarding process or managing employee transfers between departments. More complex tasks, such as employee evaluations, were to continue to be performed by humans.
This announcement came at a time when generative AI systems like ChatGPT were causing a huge stir and many employees feared for their professional future. IBM appeared to be leading the wave of AI-driven restructuring.
The surprising development: Fewer layoffs, more overall growth
Two years later, in May 2025, Krishna presented a surprising result: Instead of the announced 7,800 positions, only "a few hundred" HR employees were actually replaced by AI. Even more remarkable: Overall employment at IBM did not decrease, but increased.
While IBM has invested heavily in leveraging AI and automating certain business processes, the company's total workforce has nevertheless increased, according to Krishna, speaking to the Wall Street Journal, as this has allowed for greater investment in other areas. IBM's 2024 annual report shows that the company employs 270,300 people worldwide – a significant increase compared to the 260,000 employees in 2023.
The use of AI has therefore not led to a shrinking of the company, but to a redistribution of resources and a realignment of the personnel strategy.
AI implementation at IBM: AskHR and AskIT
IBM's AI transformation began in 2016 with the introduction of its first chatbots and continued in 2017 with the launch of its first live system. The current platform, "AskHR," forms the core of this development. This "digital HR manager" not only provides advisory services but also executes complex processes fully automatically. For example, an employee's transfer can be handled through a dialogue between a manager and the bot, without any manual intervention from a human HR professional.
According to IBM's CTO Ji-eun Lee, AskHR has now automated 94 percent of simple, routine HR tasks, including vacation requests and payroll. A similar system called "AskIT" has reduced the number of calls and chats for the IT department by 70 percent.
These efficiency gains have also had a financial impact: IBM reports a "productivity increase" worth $3.5 billion over the last two years through the use of AI in more than 70 business areas.
The double-edged sword: Winners and losers of the AI transformation
The developments at IBM clearly demonstrate the ambivalent nature of the AI transformation. On the one hand, several hundred HR employees lost their jobs – for them personally, the AI revolution was no cause for celebration. On the other hand, the company invested the freed-up resources in other areas and created new positions, particularly for "critical thinking" and interpersonal interactions.
IBM has leveraged the resources freed up by AI to hire more programmers, marketing experts, and sales staff. Krishna emphasized that these roles require "critical thinking" and involve "interacting with other people"—as opposed to "purely process-oriented work." This shift illustrates a fundamental change in the world of work: routine tasks are increasingly automated, while complex, creative, and social activities gain in importance.
IBM's experience shows that while AI eliminates certain jobs, it also creates new ones. However, these new positions often require different qualifications and skills than the eliminated roles. This presents employees with the challenge of continuously learning and adapting.
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Strategies for employees and companies in times of AI transformation
IBM's history offers important lessons for employees and companies alike. Krishna himself, in an interview with the "Sunday Times," advised focusing on critical thinking skills: "Psychology, engineering, history – you learn all of that there." These skills enable people to adapt to changing and unpredictable circumstances.
For companies, the IBM example shows that a strategic approach to AI implementation can enable both productivity gains and growth. IBM did not primarily view AI as a tool for cost reduction, but rather as a means of reallocating resources to more value-creating areas.
Madeleine Bauer-Eder, CHRO at IBM Austria, emphasizes that it is crucial to view AI as a complement to human work, not a replacement. A collaborative approach, where humans and machines work together rather than against each other, could be the key to successfully shaping the AI revolution.
AI as a transformer rather than a destroyer
The story of IBM's AI transformation illustrates that the impact of artificial intelligence on the labor market is more complex than initially assumed. Instead of the feared mass unemployment, we are witnessing a reshaping of the world of work with both winners and losers.
While several hundred IBM employees lost their jobs in HR, the company as a whole created more jobs than it eliminated. AI has proven to be not merely a cost-cutting tool for IBM, but rather a catalyst for a strategic realignment of its workforce towards higher-value roles.
This development underscores that AI is indeed a double-edged sword – posing risks for certain professions, but also offering significant opportunities for companies and employees who can adapt to the new demands. The key challenge lies in making good use of the resources freed up by AI and enabling employees to transition into new, future-proof fields of work.
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