Microsoft cut 4,000 jobs two months ago in July. If you think that was bad, wait until you hear tech giant Hewlett Packard’s (HP) plan. Despite recent Street-beating third-quarter results that saw the company’s stock jump 5%, Hewlett Packard Enterprise is planning to put thousands of its employees jobless – scheduled by year end – worldwide.
Either by number or percentage point, Hewlett Packard Enterprise has a bigger number to deal with when compared to Microsoft. The plan is to cut 10% or at least 5,000 of its staff by Christmas. But according to insiders, the job cut will start “before” the end of the year. Therefore, 50,000 of its workers – both in the U.S. and abroad, including managers – will be affected.
But if you’re not part of HPE or Hewlett Packard Enterprise, then you’re literally safe because you’re not part of the job cutting exercise. Chief Executive Officer Meg Whitman has since split the company into two US$50 billion divisions, one focused on printers and PCs (HP) and the other targeting servers and storage (HPE).
Hewlett Packard Enterprise offers cyber-security, enterprise Wi-Fi, cloud services, servers and other corporate technology. Whitman, formerly eBay CEO and recently courted rumours about leaving Hewlett Packard for the CEO position at Uber, has also spun off its enterprise services business and merging its enterprise software business.
The primary reason for axing its workers is pretty much the same as Microsoft – under pressure from cloud providers such as Amazon.com Inc. and Alphabet Inc.’s Google. At least, that’s what CEO Meg Whitman is selling to the board since she took over Hewlett Packard in 2011. In reality, it’s all about enriching the shareholders, of course.
Back in June, CEO Whitman said that HPE was almost done with “one of the largest transformations in American business history,” and proudly proclaimed that investors would see fatter profit margins toward the end of this year. As it now turns out, her plan of fattening shareholders includes retrenching 10% of her 50,000 army of strong workers.
Actually, Whitman dropped the hint of slashing her employees last month when she said she’s pushing to cut “layers” in the organization and become more efficient. She told analysts in a call – “With fewer lines of business and clear strategic priorities, we have the opportunity to create an internal structure and operating model that is simpler, nimbler and faster.
The company’s Chief Financial Officer Tim Stonesifer had also gave away hints of the layoff when he said that the company is targeting US$1.5 billion in savings over a 3-year period. Apparently, the end of employment with Hewlett Packard for 5,000 staff also means the start of a new initiative under CEO Whitman called “HPE Next”.
Whitman wrote in a memo – “We’re going to review all of the processes of the company, as well as the accountabilities, to see where we can be more agile. We will look at how we can prioritize investments in growth areas and capabilities that set us up for the future.” Not only the company is cutting unattractive and unproductive divisions, the tech company is also playing catch up in the enterprise cloud game.
Based on Microsoft model of job axing in order to move toward cloud computing, Hewlett Packard salespeople would be heavily affected, especially those who were accustomed to the company’s on-demand processing power and data storage products but could not or refuse to adapt to changes, including learning how to sell cloud-computing products.
Although Hewlett Packard hasn’t dropped any hints on cloud services, it’s highly likely that the company will be hiring sales employees with expertise in “cloud solutions”, or a mix of technical and sales expertise (such as pre-sales consultants), to help customers make use of on-demand software. This was the direction of Microsoft previously.
CEO Whitman is under tremendous pressure from boards and shareholders as Hewlett Packard struggles against rivals such as Amazon.com Inc., which saw Amazon Web Services revenue jump 47% in its last quarter, and Microsoft Corp.’s Azure, which reported sales almost doubled (93%) on its cloud-based product.
Early of this month, Hewlett Packard Enterprise announced the acquisition of consulting firm Cloud Technology Partners in an attempt to strengthen HPE’s Hybrid IT capabilities by extending its cloud consulting business. This is the 5th company HPE has purchased this year after SimpliVity (US$650 million cash), Cloud Cruiser, Niara Inc. and Nimble Storage (US$1.09 billion cash).
Interestingly, like legacy tech companies such as IBM, Oracle and Dell EMC, Whitman is trying to move Hewlett Packard toward the same hybrid approach. However, as HPE is putting together a viable hybrid offering, they are a bit late to the game. As the acquisition of Cloud Technology Partners also brings onboard 200 employees, this could be one of the reasons old employees are being axed.
Because Boston-based Cloud Technology Partners is also Amazon Web Services premier consultancy firm, there is a possibility that non-salesperson of Hewlett Packard could be on the chopping board too. Technical staff such as pre-sales consultants who aren’t currently in the cloud-based computing might not be given a chance as there is a ready pool of experts just recruited (Cloud Technology Partners).
Still, Whitman might decide not to replace the 5,000 jobs at all after this year. That’s because one of the factors contributing to tumbling server, storage and networking revenue is due to reduced demand from a primary Tier-1 service provider customer – top public cloud provider Microsoft. The jobs cutting, hence cost saving, could be nothing but Whitman’s only strategy to prolong her stay at Hewlett Packard.
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September 23rd, 2017 by financetwitter
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