HP To Cut 9000 Jobs, Invest In Cloud

Hewlett-Packard plans to cut about 3 percent of its workforce, or about 9,000 jobs out of 304,000, as it restructures and consolidates its Enterprise Services business, invests more in cloud computing and automation, and updates its data centres, company representatives said in a conference call on 1 June with analysts and stockholders.

The company is taking a multi-year charge of $1 billion (£678,377) for severance and asset impairment charges and expects to see “annualized gross savings of approximately $1 billion and net savings after reinvestment in a range between $500 million and $700 million”.

Integrating EDS

“Over the past 20 months, we focused on integrating EDS and improving profitability,” Tom Iannotti, senior vice president and general manager of HP Enterprise Services, said in a statement. “Now that the integration is largely complete, we have identified significant opportunities to grow and scale the business. These next-generation services will enable our clients to benefit from the combined technology and services leadership that only HP offers.”

For HP, announcements of restructuring leading to employee layoffs are nothing new, as acquisitions generally mean job redundancies. Major acquisitions have historically lead to job cuts at the infrastructure and services giant. HP continues to gobble up name-brand technology companies across a competitive spectrum of IT services, operating systems and hardware.

Over the last eight years, HP has acquired Compaq, EDS, 3Com and, most recently, mobile operating system and device maker Palm, as well as many smaller and midsize technology companies. 

HP has followed nearly every acquisition announcement with organizational restructuring and workforce reductions. Since 2005, under the helm of CEO Mark Hurd, HP has announced nearly 50,000 eliminations of jobs as part of restructuring and cost-trimming efforts. In a conference call in 2008, Hurd told analysts and stockholders, “We’ve acquired 30 companies over the past four years … We’re good at it.”

Ten Percent Pay Cuts

In 2005, HP restructured and eliminated 14,500 jobs; in 2008, after the $13.9 billion EDS acquisition, HP announced 24,600 job cuts. In March 2009, U.S.-based EDS employees who made more than $40,000 in salary were forced to take base pay cuts of 10 percent on top of February 2009 base pay cuts in the range of 5 to 10 percent depending on job level.