Here’s why Hewlett-Packard will cut 27,000 jobs till 2014

hp LogoBy the close of 2014 the largest PC manufacturer in the world, Hewlett-Packard, will ax as many as 30,000 jobs. Their plan is to manage their own finances by destroying the finances of 8% of its work force. This will save the PC giant a whopping $3.5 billion per year. They do not need to make up for deficiencies anywhere else, since they revealed that the money saved would be invested back into the company.

The real motivator for HP may have been the great success of iPad. As HP’s sales have gotten big bites taken out of them, they have considered reshaping their business processes. This so-called transition period will see Mike Lynch, head of HP’s Autonomy division, replaced by the current chief strategy officer, Bill Veghte. Lynch is attributed with starting up Autonomy, the software company that grew into one of the biggest tech companies throughout the UK. Autonomy was bought out by HP, though, in 2011 for a bit more than $10 billion. Could that have been a conflict of interest, since the guy who founded the company worked in the upper echelons of HP at the time of the buyout?

There are somewhere around 350,000 HP employees worldwide. No one knows who’s jobs will be cut, but it is clear that every division will be hit hard. In fact, one spokeman revealed, “There are no concrete plans about which places will be hit the hardest, but there will be losses throughout the company, regardless of division or location.”

We have to wonder whether the cuts are warranted or not. Not only will the money be reinvested back into HP, indicating no justification for the job cuts, but also profits and revenues reported in the latest quarterlies indicated better results than analysts had predicted. This just makes HP look like the bad guy, a hat which they are not used to wearing.

They are really trying to gain a footing in the spinning world of computing devices. We are in the middle of a whirlwind that is changing the landscape of computers. So you really cannot blame HP for pre-emptively adjusting its stance. They are doing it by purging their payroll, the biggest cuts in the total 73 years they have been in business. It is the third largest in all of tech history. IBM dumped 60,000 in 1993 and AT&T 40,000 in 1996.

CEO, Meg Whitman, did admit that most of the money saved would be fed into developing additional technologies to remain viable in the changing landscape.

She clearly explained the necessity to cut some jobs in order to vitalize the company for the long-term. This will likely fail, though, since HP has dropped 50,000 jobs over a five-year stint under CEO Mark Hurd. Add to that the fact that Whitman ran for governor of California in 2010 on the ironic, jobs creation platform, and failed.

As if this were not enough, there have been proposals to kill off the PC division and focus solely on software and could computing. The future of HP is now a strange beast. I doubt anyone will be satisfied in the long run.

Related Links: BBC

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