Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research, said the deceleration reflects internal execution challenges. “This shift exposes delivery strain inside a business unit expected to move faster than it currently does,” Gogia said. “While enterprise clients continue to view IBM as a dependable partner in complex environments, the way hybrid cloud is bought and measured has changed. Organisations are no longer buying platforms in isolation. They are buying the ability to act quickly.”
Red Hat is central to CEO Arvind Krishna’s strategy to shift IBM toward higher-margin software and cloud services. During the earnings call, Krishna said he expects Red Hat to return to “mid-teen percentage growth, or close to that level, entering 2026.”
Streamlining for efficiency
Gogia said the workforce reduction is designed to streamline operations rather than signal financial distress. “Over the past year, IBM has redesigned more than seventy internal workflows through automation and AI, 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.”
