Has HP underestimated job losses?

By Vivienne Fisher and Andrew Colley, ZDNet Australia, 14 May, 2002 10:51

NEWS

US-based IT industry analyst Giga Information Group, believes job losses resulting from the merger of Hewlett Packard and Compaq have been underestimated greatly. While Hewlett-Packard estimates that it will have to terminate around 15,000 jobs, Giga Information Group's Rob Enderle believes it could be closer to 30,000. Matthew Boon, principal hardware platforms analyst at Gartner Research Australia, believes that the layoff figure will be much closer to Hewlett-Packard's prediction "give or take 10 percent". "Personally I think 30,000 would be rather exaggerated," said Boon "While it may not end up exactly 15,000 -- it may be more than that -- I wouldn't expect it to be 30,000. "We can only be guided by what the company is saying, and looking at a number of their road maps -- where they are still retaining a number of dual brands -- perhaps the figure may be closer to what they are talking about; that order give or take 10 percent." However, Enderle predicts that the company will shed jobs in a series of waves rather than one sweeping cull. "There'll probably be several waves," he said, predicting the first to be announced in about three weeks' time. "About six months after there'll be another wave -- that's my guess right now." Boon, for the most part, agrees but believes there will be a longer delay between the initial round of redundancies and later phases of the downsizing process. Hewlett-Packard has chosen to retain dual brands on many of its core business units, leading Boon to believe that the teams behind them will remain intact. He said that later waves of redundancies would only occur when the company retires existing product lines, and starts to merge its offerings under a single brand. For Boon, the only reasonable prediction that can be made about the layoffs at this stage is in regards to the kinds of business roles that are most likely to feel the impact of the downsizing. "I think the place you are going to see natural attrition is where you have dual administrative type roles," said Boon. Enderle said it was still too early to predict how many layoffs would be made in each region. Those decisions, he said, would have to be made by managers that Hewlett-Packard is putting in place to restructure its business units. According to Enderle the approval process is among the ugliest the company's seen, although he added that the initial announcements about staffing changes, as well as brand and product announcements had gone reasonably well. "It does look like the extra planning is paying off," he said. If there is any disruption to customers, Enderle foresees it being during any layoff cycle that might occur. Enderle suggested that businesses monitor the people they have contact with within the new HP, and to make the upper management within the new entity aware of any dissatisfaction they have with changes. "The goal here is to tie the needs of the customer to the initiatives the company is trying to implement, so the customer gets a vote," he said.

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