IBM is reportedly cutting thousands of jobs across multiple U.S. locations, with its Cloud Classic division bearing the brunt of the layoffs. According to insiders cited by The Register, the cuts are part of a broader restructuring plan aimed at shifting jobs overseas, particularly to India. An estimated 9,000 positions are at risk, affecting around 25% of Cloud Classic staff and 10% of the broader Cloud division.

The layoffs span key IBM hubs, including Dallas, New York, Raleigh, and multiple California locations. Departments impacted include consulting, cloud infrastructure, internal IT, corporate social responsibility, and sales. Some employees were notified individually by managers, while others learned of their termination through internal meetings.

IBM has not publicly confirmed the layoffs. However, during an investor call in January, CFO James Kavanaugh acknowledged ongoing workforce reductions, stating, "We expect workforce rebalancing fairly consistent with prior years."

The Cloud Classic division traces back to IBM's 2013 acquisition of SoftLayer, providing services like bare-metal servers, virtual servers, storage, and networking within a traditional cloud environment. Despite maintaining the infrastructure, IBM has pivoted to its more advanced IBM Cloud VPC (Virtual Private Cloud), which offers enhanced hardware, faster networking (200 Gbps vs. 25 Gbps), greater resource flexibility, and improved security. This transition signals a likely migration of Cloud Classic customers to VPC, making the division's downsizing a strategic move.

Insiders suggest IBM is accelerating job offshoring to India, where open positions reportedly far outnumber those in the U.S. One former employee described the layoffs as a "resource action," IBM's internal term for workforce reductions. Another source confirmed, "They're moving as many roles to India as possible."

Adding to the tension, remaining employees are now required to return to the office three days a week by the end of April. Badge swipes are reportedly being monitored, with medical exemptions discouraged by management.

IBM has also stopped reporting revenue separately for certain business units, including Hybrid Platform & Solutions and Security, raising speculation that these segments may be struggling.

As IBM continues restructuring, insiders predict further layoffs, especially as the company pursues acquisitions and automates or offshores more roles. Employee morale appears to be faltering, with criticism aimed at CEO Arvind Krishna, particularly after his recent pay increase despite ongoing layoffs and outsourcing efforts. Krishna has publicly stated that AI will "boost programmers, not replace them," but skepticism remains high within the workforce.

The situation underscores the growing tension between cost-cutting strategies and employee retention, leaving many to question what's next for IBM's cloud ambitions and workforce stability.