The Strategist

HP is Going to Clean the House Once Again

09/16/2015 - 15:22

Yesterday, Hewlett-Packard introduced the corporation’s financial projections for the year 2016 in view of its impending separation into two independent companies - HP Inc. and Hewlett-Packard Enterprises (HPE). According to the plans, HP’s personnel will be downsized by 25-30 thousand jobs until the end of October in order to reduce costs and improve the competitiveness of the company.

Cinerama14 by wikimedia
Cinerama14 by wikimedia
Large-scale restructuring of the corporation Hewlett-Packard, which provides its separation into two independent companies - HP Inc. and Hewlett-Packard Enterprises (HPE), will result in a new round of cuts. The company reported about this in its financial forecasts for 2016. About 10% of the jobs (25-30 thousand people) are going to be rightsized this autumn.

54 thousand jobs have been reduced over the past three years under the leadership of Meg Whitman. The new layoffs will be primarily carried out in HPE, which will develop solutions for corporate customers and service after the separation of the corporation on November 1. Mainly, the job cuts will affect call centers and service centers in developed countries. Many of the functions will simply be automated, and some jobs will be transferred from the developed countries to states such as India and Costa Rica. It is planned that by 2018, up to 60% of employees HPE will be located in developing countries. The HP Inc., which will manufacture printers and computers after the separation of the corporation, will cut 1.2 thousand jobs in 2016, and before the end of 2018 - another 2.1 thousand.

As HP management estimates, the corporate restructuring would lead to an annual cost reduction of $ 2.7 billion, although initially the company will have to spend the same $ 2.7 billion to cover costs related to the dismissal of employees. It is expected that the annual revenue of HPE after separation will be $ 50 billion. At the end of 2014 fiscal year, the figure in the HPE reached $ 55.1 billion.