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SOFTWARE INDUSTRY NEWS |
HP to take $1 billion hit in costs, cut 9,000 jobs |
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HP plans to put in $1 billion in “the next generation of its Enterprise Services business.” In a regulatory filing yesterday, HP said the $1 billion charge would account for paying severance to the 9,000 positions it plans to reduce and to modernize data centers to provide more automated services to customers.  In its statement earlier today, HP said that the resultant transformation from the expense and job cuts would let HP use its technology and software to benefit clients through new offerings and improved service delivery. HP said it will invest in fully automated, standardized, state-of-the-art commercial data centers built on its Converged Infrastructure and operated by its management software. Leveraging experience from its own IT transformation, HP said it would enable clients to migrate their applications to these modernized infrastructure platforms, allowing them to run their businesses faster and more efficiently.The initiative is aimed at enhancing client experience and better positioning Enterprise Services for growth, HP said. Reports said the move would allow HP to better compete with rival IBM. HP will consolidate Enterprise Services' commercial data centers, management platforms, networks, tools and applications to create a more scalable, modernized and automated IT infrastructure to better serve its clients' needs. As a result of the productivity gains and automation, HP said it expects to eliminate roughly 9,000 positions over a multiyear period to reinvest for further growth and to increase shareholder value. Reports said around 6,000 positions would most likely be replaced with workers in different countries, mostly in sales roles. To fund the transformation, HP said it will take a charge of approximately $1 billion over a multiyear period that will be included in its GAAP financial results. Once completed, HP expects the transformation to generate annualized gross savings of approximately $1 billion and net savings after reinvestment in a range between $500 million and $700 million. |
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