US computer giant Dell is to launch a fresh round of job cuts this week with up to about 12,500 roles at risk, as it tries to slim its management and marketing functions.
Over the past 15 months, the Texas-based firm has shed more than 20,000 jobs.
“We are getting leaner,” said Dell executives Bill Scannell and John Byrne in a memo to employees sent out on Monday 5 August. “We’re streamlining layers of management and reprioritising where we invest.”
A spokesperson told Bloomberg that through “a reorganisation of our go-to-market teams and an ongoing series of actions, we are becoming a leaner company”.
The spokesperson added: “We are combining teams and prioritising where we invest across the company. We continually evolve our business, so we’re set up to deliver the best innovation, value and service to our customers and partners.”
Tech sector
Microsoft links security to employee performance reviews
Intel to cut 15,000 jobs by end of 2024
The job cuts follow Intel’s similar plan to axe 15,000 jobs as it looks to focus on AI – itself the subject of “burst bubble” speculation.
Earlier this week the value of shares fell sharply in the US. There has been concern that shares in big technology companies, particularly those investing heavily in artificial intelligence (AI), have been overvalued and are now facing difficulties.
A further sign of weakening confidence in the tech economy is speculation that Nvidia, which makes AI chips, will delay its latest product launch.
Unforeseen costs of redundancies
Business analyst Gartner has reported that 52% of employees are actively searching for a new position because of layoff concerns. It found that among organisations that have not conducted a layoff, employee concerns about potential future layoffs decrease their intent to stay in their current role by up to 9%.
Alexander Kirss, senior principal at Gartner HR, warned: “Given the higher cost of capital and renewed investor focus on profitable growth, leaders, particularly CFOs, are under pressure to reduce costs. Subsequent reductions may take the form of layoffs.
“Although intended to be cost-saving, layoffs themselves are often costly. Organisations must recognise both the immediate upfront costs of layoffs, including the need to reorganise itself around a smaller group of employees and the costs of upfront severance payments, as well as medium-term costs.
“For example, they are also likely to see compensation demand among remaining employees increase as they now carry a greater burden. Importantly, Gartner’s research indicates that forecasted savings tend to become offset by the unforeseen consequences of layoffs within three years.”
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