Dell Technologies officials reportedly will cut as many as 3,000 jobs in the wake of the closing of the company’s $60 billion-plus acquisition of EMC this week.
Citing unnamed sources, a Bloomberg report said the bulk of the 2,000 to 3,000 layoffs will come in the United States and hit on such areas as supply chain and general and administrative positions. Some marketing jobs also will be lost, according to the sources.
The report comes days after Dell completed the deal Sept. 7 to acquire EMC and its various federated companies, including RSA, Pivotal, Virtustream and VMware. The merging of the two top-tier tech vendors creates a $74 billion company with 140,000 employees in 180 countries, including a 40,000-person sales force and 30,000 services employees. The new company’s reach will touch on most segments of the tech industry, from PCs and data center infrastructure to hybrid clouds, security, the internet of things (IoT) and virtualization.
Job cuts after acquisitions are not unusual as the new larger company looks to reduce costs and eliminate overlaps in products and job duties. According to the Bloomberg report, Dell officials want to save about $1.7 billion in costs in the first 18 months after the deal closed. Dell and partner Silver Lake Partners are taking on almost $50 billion to pay for the EMC acquisition.
In an emailed statement to journalists, Dell spokesman Dave Farmer said that even as there may be some job losses, the larger goal of the EMC acquisition is to grow sales, which in turn will mean more hiring.
“As is common with deals of this size, there will be some overlaps we will need to manage and where some employee reduction will occur,” Farmer wrote. “We will do everything possible to minimize the impact on jobs. We expect revenue gains will outweigh any cost savings, and revenue growth drives employment growth.”
Dell and EMC officials first announced the deal in October 2015, valuing it at the time at $67 billion, the largest in tech industry history. The move came as the two vendors—one a top maker of PCs and data center servers, the other the world’s largest data storage company—look to address a rapidly changing tech industry impacted by the rise of such cloud vendors as Google, Amazon and Microsoft’s Azure business, as well as such trends as the proliferation of mobile devices, data analytics, virtualization and the internet of things.
Like other established vendors, Dell and EMC are trying to make their way in the new world while protecting the years of investments and innovation in current products. Dell Chairman and CEO Michael Dell has said that the new company will have a firm position in traditional technology while becoming a leader in emerging areas of enterprise IT.
During a conference call with journalists and analysts this week to discuss the deal, Michael Dell pointed to the company’s capabilities to offer “seamless technology infrastructure from the edge [of the network] to the core to the cloud.”
The move to get bigger by buying EMC is in sharp contrast to what rival Hewlett Packard Enterprise (HPE) is doing. Under CEO Meg Whitman, HPE continues to shed businesses as it looks to focus on enterprise IT infrastructure and systems software, as well as IT services. The same day that Dell announced the closing of the EMC deal, Whitman announced that HPE was spinning out its enterprise software unit and merging it with Micro Focus in a deal worth about $8.8 billion.