Hewlett-Packard Enterprise, the newly formed company hopes to reduce costs by $ 2.7 billion through this layoff.
In October, 2014, Hewlett-Packard had decided to split into two new companies — Hewlett-Packard Enterprise (HPE) and HP Inc. (HPI). While HPE would be dealing with the businesses of enterprise technology infrastructure, software and services, HPI will comprise the personal systems and printing businesses.
Unfortunately, this split has come at the price of 25,000 to 30,000 jobs. In order to achieve a cost savings of $ 2.7 billion, HPE will ask as many people to leave. The company has to cut on the expenses following the separation and also to meet certain demands of the Enterprise Services business.
HP’s current workforce strength is around 300,000 and this job cut will bring the size down by 10 per cent. In the past, H-P had laid off 55,000 employees.
The company said in a press release, that the cost reduction strategy, including the $2 billion restructuring programme, is expected to improve operation profit. It will also result in a long-term, sustainable, market-competitive cost structure with a 7–9 per cent operating margin, by fiscal 2018.
Meg Whitman, current chairman, president and chief executive officer of HP, who will become president and chief executive officer of Hewlett Packard Enterprise, said in an official communique, that “These restructuring activities will enable a more competitive and sustainable cost structure for the new Hewlett Packard Enterprise.”
“We’ve done a significant amount of work over the past few years to take costs out and simplify processes, and these final actions will eliminate the need for any future corporate restructuring,” she added.
According to the company’s official statement, “This will result in a GAAP-only charge of approximately $2.7 billion, beginning in the fourth quarter of fiscal 2015. The cash impact will be approximately $2.6 billion over the next three years, beginning in fiscal 2016.”
HPE expects around 37 per cent of its revenue to come from the enterprise solutions business.