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HP Enterprise will shed another 25,000 to 30,000 jobs on its road to profitability as a standalone company.
The job cuts, disclosed at HP's Securities Analyst Meeting this week, are on top of 55,000 cuts over the past few years from the existing HP. HP officials didn't give a specific breakdown of the divisions or locations where the cuts will occur, but said the cuts would be "primarily associated with the [Enterprise Services] transformation" set to occur on Nov. 1. The cuts will account for about 10% of the company's 300,000 person workforce.
"These actions will eliminate the need for any future corporate restructuring," HP Enterprise CFO Tim Stonesifer said during the analyst meeting.
The job cuts will save the company $2 billion annually, Stonesifer said, with another $700 million in savings from real estate shutdowns.
HP Enterprise will be smaller and more focused than HP is today, allowing the company to "read the winds of change and course correct faster," CEO Meg Whitman said during the analyst meeting.
The strength of the company will be based on the success of enterprise services, she said, and the job cuts are part of a new focus on "solutions-based selling."
The Enterprise Service division will involve more automation and be run from low-cost areas of the world, Whitman said. While previous rounds of job cuts were designed to bring the company's costs in line with its revenue, the latest cuts are about margin expansion.
The other half of the impending split will form HP Inc., and focus on the PC and printer business. HP Inc. will also lay off about 3,300 people during the next few years, analysts were told during this week's meeting.
The cuts to Enterprise Services were likely because it is a very challenging market -- not just for HP, but anyone involved in outsourcing it, said Patrick Moorhead, analyst at Moor Insights and Strategy in Austin, Texas.
The job cuts will help HP Enterprise increase its focus to become more innovative, Moorhead said.
"HP Enterprise is already a heavy hardware innovator and has shown some software chops with HP Labs, but I think they need to find a way to take back some of the innovation with The Machine," Moorhead said. "The Machine is very innovative and they need more initiatives like it."
The Machine is still in the works, but is now shaping up to be a scaled-back version of what was initially announced in 2014, shifting from the use of memristors to conventional DRAM memory. It is scheduled to be available next year, with 320 TB of memory.
The increased focus on Enterprise Services makes sense for HP, and the company offered a "rational" plan about how the different divisions of HP Enterprise will work together, said Dana Gardner, IT analyst at Interarbor Solutions, LLC in Gilford, N.H., who closely follows HP.
"They are going to make [Enterprise Services] work and more closely align with software and cloud," Gardner said.
Robert Gates covers data centers, data center strategies, server technologies, converged and hyper-converged infrastructure and open source operating systems for SearchDataCenter. Follow him on Twitter @RBGatesTT or Email him at [email protected].
HP split could mean enterprise contract savings