The IBM technology and counseling giant was not immune to the cuts of the Department of Government Efficiency (DOGE).
IBM had 15 of its canceled federal contracts due to DOGE -related cuts during the first quarter of 2025, according to Reuters and Bloomberg reporting. These cuts reach $ 100 million in future payments for Bloomberg. Federal contracts represent between 5% and just below 10% of IBM counseling practice.
After being created with questions when calling for IBM’s profits on Wednesday, Arvind Krishna, CEO of IBM, explained that the cancellations had to do with cuts in USAID. Both Kavanaugh James and James Kavanough, IBM’s CFO, then continued to minimize the potential impact of DOGE on the company’s future business.
“We have had a small portion of the contracts, or a statement of work, or to cancel in our annual background of over $ 30 billion in total counseling,” Kavanaugh said. “This is like less than $ 100 million backward for a duration of many years. So while no one is immunity, we are absolutely focused on monitoring the dynamic process of identity. We are careful about the year’s counseling.”
IBM’s counseling business accounted for 34% of the company’s revenue in Q1. Krishna added that the company’s federal government advisory contracts focus mainly on the essential areas.
“The vast majority is critical work – we actually elaborate on veterans’ benefit claims,” Krishna said. “We help process how procurement (general services administration) does. We help implement pay systems. I don’t think these as optional. Now, are there some areas about the edges that can be seen as discretionary? Yes. But in our case this is the minority of our business, not the majority.”
IBM counseling revenues were generally reduced to Q1, according to the results of the company’s first quarter. Q1 counseling revenues were just over $ 5 billion.
“Diversity throughout our business positions us well to navigate the current climate,” Krishna said. “Our portfolio and record of execution strengthen my confidence in this next chapter of our growth. I look forward to share our progress as we move on to the rest of the year.”
