HP slashes jobs and closes enterprise division

HP has announced 14,500 redundancies and will close down its separate enterprise sales division as part of its attempt to streamline operations and cut costs.

HP has announced 14,500 redundancies and will close down its separate enterprise sales division as part of its attempt to streamline operations and cut costs. 

The redundancies and the company restructure are designed to save a total of $1.9bn (£1.08bn) annually.

HP is also changing the format of its US company pension scheme, reducing the benefits to employees.

“After a thorough review of our business, we have formulated a plan that will enable HP to begin delivering its full potential,” said HP chief executive officer Mark Hurd. “We can perform better – for our customers and partners, our employees and our shareholders – and we will.” 

The company plans to reduce its workforce over the next 18 months by 14,500 employees – about 10% of its regular full-time staff.

As a result, beginning in fiscal year 2007, HP expects approximate ongoing annual savings of $1.9bn, made up of $1.6bn in saved labour costs and $300m in benefits savings. 

HP expects to record pretax restructuring charges of approximately $1.1bn over the next six quarters, beginning in the fourth quarter of fiscal 2005. 

This excludes a previously announced $100m restructuring charge to be taken in the third quarter, also linked to job cuts. 

HP said reductions in sales positions would be minimal, and that there would be little change to the headcount in research and development.

The majority of redundancies will come in support functions, such as IT, HR and finance. The remainder will be made inside business units, in areas where work can be reduced by improving processes and reprioritising existing tasks, according to HP.

The job cuts programme will vary by country, based on local legal requirements and consultation with works councils and unions.

“To simplify the company and bring its sales force closer to customers, HP will dissolve the customer solutions group”, said HP.

The customer solutions group is the standalone business unit responsible for sales to enterprises, SMEs and public-sector customers. The group will be merged into the technology solutions group, the imaging and printing group, and personal systems group. 

HP will aim to reassure enterprise customers that the changes will benefit them. 

Hurd said, “Our objective is to implement these measures smoothly, with as little disruption to our business as possible. Great companies grow and reduce costs. We will do both.”

Read more on IT for small and medium-sized enterprises (SME)

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