Technology services firm Kyndryl announced Wednesday it will eliminate positions as part of a comprehensive cost-reduction strategy, while projecting annual earnings that fall short of Wall Street expectations.
The company’s stock price dropped more than 12% during early market hours following the announcement.
Since becoming independent from IBM in 2021, Kyndryl has been working to overhaul numerous unprofitable contracts it took over from the technology giant in an effort to boost its financial performance.
The workforce reduction initiative is designed to slash yearly operational expenses by approximately $400 million to $500 million by fiscal year 2028, according to company officials.
Kyndryl anticipates recording roughly $200 million in associated costs, primarily for employee severance packages and benefit payments.
These job eliminations follow a series of corporate challenges, including a delayed quarterly filing for the October-December period, several executive leadership changes, and an internal accounting investigation into potential control system weaknesses.
As of March 31, 2025, the company employed approximately 73,000 workers worldwide. Company representatives did not reveal the specific number of positions that will be eliminated.
For fiscal 2027, Kyndryl projects adjusted earnings before taxes ranging from $600 million to $700 million, factoring in workforce restructuring expenses. The middle point of this projection falls below the analyst consensus of $672.7 million compiled by LSEG.
However, the company continues to see strong market demand for its services. Businesses have maintained spending on critical software and information technology services despite economic uncertainties related to President Donald Trump’s international trade policy discussions.
This market trend has provided protection for companies like Kyndryl, whose offerings support essential daily business functions and help organizations implement artificial intelligence solutions throughout their technology infrastructure.
The company’s fourth-quarter revenue reached $3.77 billion, surpassing analyst projections of $3.75 billion. However, adjusted earnings per share dropped significantly to 18 cents, well below the anticipated 45 cents.
