HP announced it will cut 9,000 jobs by October 31, and a total of 27,000 jobs, eight percent of its workforce, by the end of 2014.
HP announced it will cut 9,000 jobs by October 31, and a total of 27,000 jobs, 8 percent of its workforce, by the end of 2014. The layoffs are part of a multi-year turnaround to refocus their efforts toward the future. The restructuring plan is expected to save the company over $3 billion, which it maintains will be largely invested into research and development.
This isn’t the first time Hewlett-Packard has resorted to a major layoff plan to restructure their upcoming business needs. In 2008, they laid off 25,000 employees, the third largest in tech history.
Companies like IBM, Apple and Dell are putting the squeeze on HP from a multitude of product lines. For Hewlett-Packard to stay competitive they are finding that they need to streamline their processes and their services. Each department must carry itself and be a tough competitor it the market it represents.
Meg Whitman, Hewlett-Packard’s CEO and the Republican’s choice for Governor in the state of California in 2010, said, “”While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long term health of the company.”
Recently, HP combined their computer and printer divisions to help save money. Although, Hewlett-Packard is the number one seller of personal computers in the world, their profit margins are very low. Printer ink sales have helped to carry the printer division, but there has been a 10 percent decline in sales.
ComputerWorld reports, by combining departments and reducing the number of employees, Whitman is looking forward to a more “organic” company. Future plans include in-house development of new technologies, in which, they will create new departments within the company, or buy-out other companies to help supplement their needs.
Not all the money generated from the layoffs will be pumped into R&D. Whitman plans to have “the very best quality in the industry.” Hewlett-Packard’s software business was the only area within the company that saw growth last quarter, and Whitman is going to invest more money to increase product sales. Cloud computing, big data and analytics, and security are other venues being looked at for Hewlett-Packard’s future.
Hewlett-Packard is just one of many companies learning about the importance of change. Technology is constantly growing at a tremendous pace, and to be a leader in the technology field, companies must also change at least as fast as their products.
CIOs should create an organic infrastructure within their own company to prepare for the inevitable change that will befall all successful companies, progress.