In the face of declining revenue, HP has announced it expects to lay off 4,000 to 6,000 employees by the end of fiscal year 2025, reducing its 51,000-strong global workforce by about 12%.
The news comes as economic turbulence causes other major technology companies to announce layoffs.
The news of the HP job cuts was made public when the company on Tuesday posted its fourth quarter 2022 financial results, which saw a year-on-year decline in revenue of 11.2% to $14.8 billion. The company’s personal systems, consumer, and commercial segments fell by 13%, 25% and 6% respectively. Notebook and desktops units also saw a decline, with units decreasing by 21% overall.
The job cuts form part of HP’s so-called “Future Ready" strategy, announced in conjunction with its quarterly results. In a conference call with analysts after the result were posted, HP President and CEO Enrique Lores said the strategy would enable the company to better serve its customers and drive “long-term value creation by reducing our costs and reinvesting in key growth initiatives to position our business for the future," according to a transcript from Seeking Alpha.
Lores added that the cost actions laid out the Future Ready plan will generate at least $1.4 billion in savings by year-end fiscal year 2025, allowing the company to navigate what he described as “near-term market headwinds” and mitigate softness in HP’s core markets.
In a statement, HP said: “As part of the actions we are taking, we will be reducing the size of our workforce by 4,000-6,000 people over the next three years. These are the toughest decisions we have to make, because they impact colleagues we care deeply about. We are committed to treating people with care and respect – including financial and career services support to help them find their next opportunity.”
Helwett-Packard split the PC and printer business off from its enterprise business in 2015. Hewlett-Packard Enterprise, also known as HPE, comprises enterprise hardware, software and services businesses, and will report results next week. HP Inc., the PC and printer company, is generally known simply as HP.
PC sales decline
Earlier this year, IDC reported that third-quarter PC sales fell by 15%, year-over-year. Commenting on the news back in October, Jitesh Ubrani, research manager for IDC's Mobility and Consumer Device Trackers, said: “During the peak of the pandemic, many consumers, schools, and business sought new PCs and that surge has been largely fulfilled.”
Record levels of inflation coupled with a cost-of-living crisis has also resulted in consumers cutting down their spending on luxury items, such as laptops and PCs.
Dell Technologies has also seen its PC sales decline over the last 12 months. Although the company’s total revenue for the third quarter was only down by 6% according to its third quarter earnings report posted Tuesday, its consumer revenue was down by 29% as a result of soft underlying PC demand and slowing infrastructure requirements.
Dell, however, having acquired storage company EMC, also sells enterprise technology, which has helped offset declines in the PC market. Its infrastructure group, which includes storage, networking and cloud technology, posted record third quarter revenue of $9.6 billion, up 12% year-over-year.
Unlike other tech companies that are laying off workers in order to reign in operating costs, Dell has not said it will be cutting jobs as a result of the financial results. However, speaking to analysts after the results were posted, Dell’s CFO, Tom Sweet, said that, from a spend perspective, Dell has “restrained hiring and put other cost control measures in place.”
The layoffs and hiring slowdowns announced by major vendors, however, are not necessarily a cause for despair for tech professionals. More than 100,000 jobs for experienced IT professionals remain unfilled in the US, according to IT employment consultancy Janco Associates.