Dell, less than five months after becoming a private company again, reportedly is looking at significant job cuts as part of its efforts to move its focus away from PCs and more toward growing its enterprise IT solutions offerings.
Citing unnamed sources within the company and internal emails, the tech site The Register said the number of job cuts could be more than 15,000, and that Dell will begin the layoff process this week. The cuts will run across all departments at the company, which like other tech vendors has been hit hard in recent years by the slowdown of PC sales worldwide.
In September 2013, founder and CEO Michael Dell and financial backer Silver Lake Partners won a contentious seven-month effort to buy the company for almost $25 billion and take it private, a move that he and other executives argued would enable them to accelerate the vendor’s transformation and reduce its reliance on its PC business.
“We can focus 100 percent on our customers so we don’t have to focus on other things—shareholders—and that allows us to make bold decisions, invest for the long term,” Michael Dell told eWEEK in December 2013. “We said on Feb. 5 [2013], when we announced the transaction, we were going to be aggressive and gain share, and that’s what we’re doing. It’s harder to do as a public company because you have to balance these short-term earnings. Listen to the conference calls of any of these [public] companies, and you have these investors and analysts asking, ‘How come this?’ or ‘How come that?’ or ‘Blah, blah, blah …’ No thank you. All done with that.”
Part of that transformation reportedly will be slashing its workforce, which numbers about 110,000. According to The Register, the severance package Dell will offer is two months’ pay, along with another week of pay for each year of service, a bonus of 75 percent, health insurance for 18 months (in the United States) and outplacement services (at least in the United States).
In a statement, a Dell spokesman said the company “can confirm that a small percentage of Dell’s global team members accepted the company’s offer of a significant severance package associated with a voluntary separation program. We’ve taken steps to optimize our business, streamline operations and improve our efficiency over the past few years. And, like any prudent business, we’ll continue to do so. Meanwhile, we’re hiring in strategic areas of our business, including hardware and software development, engineering and customer coverage worldwide.”
Tech companies like Dell and Hewlett-Packard have been hit by a number of trends in the industry, from the shift by consumers and business users from PCs to tablets and smartphones to the increasing migration of server workloads to the cloud. HP, in the middle of a five-year turnaround plan, is in the process of cutting 34,000 jobs as it looks to recover its financial footing.
IBM is dealing with the increasing commoditization of x86-based systems by selling its low-end server business to Lenovo and focusing more on such areas as cloud computing and big data analytics.
For its part, Dell has spent billions of dollars over the past few years buying dozens of companies to build up its capabilities in such areas as networking, storage, enterprise software and the cloud. In addition, Dell also is extending its reach into the mobile world through such devices as tablets.
The company on Jan. 28 announced it was partnering with Cumulus Networks to offer network gear that will run Cumulus’ Linux operating system. The move challenges the likes of Cisco Systems and Juniper Networks by offering networking equipment that runs on standard processors and supports an open OS, rather than having to buy a more traditional integrated hardware and software package.