Hewlett-Packard to cut 24,600 jobs

Hewlett-Packard Co. will trim its workforce by 24,600 employees as part of what the company says is a restructuring program prompted by the acquisition of EDS Corp. in August.

The goal is to "better align the combined company's overall structure and efficiency with the operating model that HP has successfully implemented in recent years," the computer maker said in a statement released Sept. 16.
Approximately 7.5 percent of both companies' employees will be affected, with nearly half of the reductions occurring in the United States.

The layoffs and the restructuring program, which will take place over three years, will streamline the combined company's services businesses, HP said. "Workforce reduction plans will vary by country, based on local legal requirements and consultation with works councils and employee representatives, as appropriate."

The company "expects to replace roughly half of these positions over the next three years to create a global workforce that has the right blend of services delivery capabilities to address the diversity of its markets and customers worldwide," the statement said.

In addition to making changes to its global workforce to better serve its services customers, HP has identified synergies in corporate overhead functions, such as real estate, information technology and procurement, the statement added.

The layoffs will help address Wall Street concerns "that too many EDS employees are based in the U.S. at a time when competitors are cutting costs by sending jobs offshore," according to the Wall Street Journal.

HP is "basically replacing more expensive U.S. employees with overseas workers," the newspaper quotes Shebly Seyrafi, an analyst at Calyon Securities, as saying.

Once completed, the restructuring program is expected to result in annual cost savings of approximately $1.8 billion, HP said.

Hewlett Packard, of Palo Alto, Calif., ranks No. 39 on Washington Technology's 2008 Top 100 list of the largest federal government prime contractors.

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

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