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Tech and consulting giant IBM was not immune to the Department of Government Efficiency\u2019s (DOGE) cuts.<\/p>\n
IBM had 15 of its federal contracts canceled due to DOGE-related cuts during the first quarter of 2025, according to reporting from Reuters<\/a> and Bloomberg<\/a>. These cuts amount to $100 million in future payments, per Bloomberg. Federal contracts represent between 5% and just under 10% of IBM\u2019s consulting practice.<\/p>\n After being peppered with questions during IBM\u2019s earnings call Wednesday, Arvind Krishna, IBM\u2019s CEO, clarified that the cancellations were related to cutbacks at USAID. Both Krishna and James Kavanaugh, IBM\u2019s CFO, then proceeded to downplay the potential impact of DOGE on the company\u2019s future business.<\/p>\n \u201cWe\u2019ve had a handful of contracts, either statement of work, or cancel and on our annualized backlog of over $30 billion in total consulting,\u201d Kavanaugh said. \u201cThis is like less than $100 million of backlog over a duration of multiple years. So while no one\u2019s immune, we are absolutely focused on monitoring the identity dynamic process. We\u2019re prudently cautious around consulting for the year.\u201d<\/p>\n IBM\u2019s consulting business made up 34% of the company\u2019s revenue in Q1. Krishna added that the company\u2019s federal government consulting contracts largely focus on crucial areas.<\/p>\n \u201cThe vast majority is critical work \u2014 we actually process veterans benefit claims,\u201d Krishna said. \u201cWe help process how the [General Services Administration] does procurement. We help implement payroll systems. I don\u2019t think of these as optional. Now, are there some areas around the edges which could be viewed as discretionary? Yes. But in our case that is the minority of our business, not the majority.\u201d<\/p>\n IBM\u2019s consulting revenue was down 2% overall in Q1, according to the company\u2019s first-quarter results. Revenue from consulting in Q1 was slightly over $5 billion.<\/p>\n \u201cThe diversity across our business positions us well to navigate the current climate,\u201d Krishna said. \u201cOur portfolio and track record of execution reinforce my confidence on this next chapter of our growth. I look forward to sharing our progress as we move through the rest of the year.\u201d<\/p>\n<\/div>\n