HP’s layoff plans and what they mean
You gotta love Silicon Valley. The Facebook IPO is creating dozens and dozens of new millionaires. Apple, thanks to the iPhone and iPad, has seen its employment nearly double in two years.
And then there is valley icon Hewlett-Packard.
HP is expected to announce a large layoff at its quarterly investors briefing on Wednesday. As many as 30,000 employees may be cut. That’s almost as many employees as Apple has added in the last two years.
HP hasn’t made official any plan to chop its approximately 350,000 employee global workforce. It’s not commenting on the reported layoffs, neither confirming nor denying. But the stage is set for action.
In its most recent quarter, HP’s net revenue of $30 billion was down 7% from the prior-year period. Revenue from HP’s Personal Systems Group, which sells PCs and workstations, declined 15% in that same period.
When Apple was selling iPads by the boatloads, HP was having a $99 closeout sale of the Touchpad, its own tablet.
Apple’s global workforce grew from 34,300 in 2009 in to 60,400 in 2011.
Even areas that HP expected to see growth, services in particular, aren’t delivering.
HP’s big move into services came with its acquisition of EDS in 2008, which instantly added 147,000 employees to the company. In its most recent quarter, services revenue of grew 1% year over year.
Andrew Bartels, an analyst at Forrester, doesn’t see HP’s plans as a bellwether of a larger problem in IT. HP’s problem is that it is losing share to Apple, and faces a lot of competition, as are many other firms, from Indian offshore firms.
“Outsourcing jobs at U.S. firms have been lost by shifts to India,” said Bartels. That’s been offset by the overall growth of outsourcing, but “India has taken its toll.
“HP has been stuck in some slower growth categories overall,” said Bartels.
This is potentially a big layoff for the U.S. tech sector. HP doesn’t detail how many U.S. workers it has, but the trend at large IT companies, IBM in particular, has been to reduce the size of their U.S. workforce and expand in fast-growing overseas markets.
Some of HP’s job cuts may be due to cost-cutting and consolidation, thanks in part to its recently announced decision to combine the printer and PC units. The cut may involve shifting some work to lower-wage countries as well as boosting its presence in healthier economies.
HP employment numbers 2007-2011
2007: 172,000
2008: 321,000
2009: 304,000
2010: 324,600
2011: 349,600
Source: HP annual reports
Excerpt from: HP’s layoff plans and what they mean
