In a news release today, Wednesday, May 23, 2012, HP announced a multi-year restructuring plan that would result in the loss of 27,000 jobs. This represents 8% of HP’s workforce and is expected to extend to the end of 2014.
HP focused on the expected annualized savings this restructuring would bring, which totals around $3.0 to $3.5 billion by 2014. HP hopes to take that savings and reinvest it back into the company finding efficiencies and improving customer service.
The news release indicates that HP will focus on three strategic areas over the next 2-3 years: cloud, big data and security. They also hope to see additional savings in supply chain optimization, SKU and platform rationalization, and process improvement.
During a second quarter earnings call today, Meg Whitman, HP president, said, “These initiatives build upon our recent organizational realignment, and will further streamline our operations, improve our processes, and remove complexity from our business."
While 27,000 jobs is only 8% of HP, it still represents quite a large number of unemployed individuals. This is not a great sign for a still recovering economy in which HP’s sales dipped 3 percent compared to the same period in 2011.
HP did not indicate from which areas of the company these cuts would be made. However, they do realize that this will be a challenging journey. Meg Whitman added at the end of the earning call, "Turning HP around is going to take a lot of time and a lot of hard work, but we know what needs to be done."
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