IBM will completely shut its China R&D operation, affecting more than 1,000 jobs, the US technology company said on Monday.

A spokesperson for IBM, currently the world’s biggest technology services company, confirmed earlier media reports in a statement to Reuters, saying “these changes will not impact our ability to support clients across the Greater China region.”

The cuts come amid the company’s struggles with falling demand for its hardware and challenges in growth markets such as China.

The company is moving its China R&D functions to other overseas facilities, Jack Hergenrother, an IBM executive, told employees at a virtual meeting on Monday morning.

Hergenrother said IBM plans to concentrate its R&D in several regions, including India, the employees said.

The closure will affect more than 1000 people based in the R&D labs in several Chinese cities, including Beijing and Shanghai. US companies such as Morgan Stanley have also shifted some operations from China.

IBM has taken a number of steps to expand its presence in India, showing a preference to move beyond the metros. In July it announced the launch of an AI innovation centre in Kochi, while in June it signed an agreement with GIFT City, Gujarat, to set up an AI cluster.

HCLTech and IBM also announced a collaboration in July to establish a Generative AI Center of Excellence (GenAI CoE) based on the IBM watsonx™ AI and data platform.

The CoE will be available through HCLTech’s AI and Cloud Native Labs in Noida, London and New Jersey and Santa Clara in the US. It will help enterprises modernise legacy applications and develop IT service management use cases, an HCL release said.

IBM under CEO Arvind Krishna, has repositioned itself to focus on software and consulting with a renewed focus on AI, capitalising on a broader push for its integration across industries.