Leaked letter reveals Dell's redundancy plans

Dell has today written to UK staff warning them that it may be forced to make compulsory redundancies in light of the continued "challenging economic conditions".

Dell has today written to UK staff warning them that it may be forced to make compulsory redundancies in light of the continued "challenging economic conditions".

The US giant reduced its global headcount by 8,900 last year as part of a strategy to hack $3bn off operating expenses by 2011, and said recently that it had raised this cost cutting target by a further $1bn.

Dell has not specified how many staff have been made redundant, but sources suggested up to 20% of the UK workforce could be affected.

In a letter leaked to Computer Weekly's sister publication Microscope, Dell told staff that it needed to protect margins. But it warned the restructuring in January and the resulting redundancies may not be enough to counter the slowdown.

"Dell is confronted with significant cost challenges in a depreciating global economy," it said, adding that the 90-day staff consultation period begins today.

The supplier said there is a "risk" it will be unable to provide work in all sites at Bracknell, saying "therefore, we need to consider making compulsory redundancies."

"Given the current economic conditions the company regretfully expects there is a strong likelihood that redundancies will be necessary in Bracknell; it is possible the redundancies will be across the board," the letter added.

The criteria Dell will apply to decide which staff stay or go will include skills and experience, performance and future contributions.

Asked if Dell was exposed in the current climate, Ranjit Atwal, principal analyst at Gartner, said that the supplier was "in the wrong place at the wrong time".

"Given Dell's focus on hardware and the concentration of its revenues in the UK and US, particularly in the corporate enterprise, where the economic crisis has had most impact, it has been a difficult period for them," he said.

Dell was unavailable for further comment.

This story originally appeared on Microscope.co.uk.

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