Tech and Consulting Giant IBM was not affected by the Office of Government Efficiency (DOGE) reductions.
IBM cancelled 15 federal contracts in the first quarter of 2025 due to Doge-related cuts, according to reports from Reuters and Bloomberg. Those cuts, according to Bloomberg, will reach $100 million in future payments. Federal contracts are just under 5% to 10% of IBM’s consulting practices.
IBM revenue call After being questioned Wednesday, IBM CEO Arvind Krishna revealed that cancellations are linked to a reduction in USAID. Both IBM CFOs Krishna and James Kavanaugh have downplayed Doge’s potential impact on future business.
“We had either a job statement or a cancellation agreement, and we had an annual backlog of over $30 billion in total consulting,” Kavanaugh said. “This is like a backlog of less than $100 million over a multi-year period. So, no one has any immunity, but it is absolutely focused on monitoring the dynamic process of identity. We are cautious and cautious about consulting that year.”
IBM’s consulting business accounted for 34% of the company’s revenue in the first quarter. Krishna added that the company’s federal consulting agreement focuses primarily on key areas.
“The majority are important tasks. They actually handle veterans’ benefits claims,” Krishna said. “We’ll help you with how to handle it [General Services Administration] Do you have any procurement? We will help you implement payroll calculation systems. I don’t think these are options. Now, are there some areas around the edges that can be considered discretionary? yes. But in our case, it is a minority and not a majority of our business. ”
IBM consulting revenues fell 2% overall in the first quarter, according to the company’s first quarter results. First quarter consulting revenue was just over $5 billion.
“The diversity of our overall business positions us well to navigate the current climate,” Krishna said. “Our portfolio and execution track record strengthens my confidence in the next chapter of our growth. I look forward to sharing my progress as I progress through the rest of the year.”
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