More Layoffs Are Coming; HP To Terminate 6000 Workers In The Next Few Years. Why Are Layoffs Becoming So Common?
- HP may shell out $1 billion for labor and other expenses.
- Currently, the corporation has about 50,000 employees.
- In Q3 2022, global PC shipments decreased 15.5% YoY, according to Counterpoint.
After the close of its financial year in 2025, HP would enlist a rising number of IT businesses making tough decisions to decrease operating costs, including the elimination of employees. As the company disclosed during its post-earnings call, it will likely terminate close to 6,000 employees, or around 12% of its global workforce.
The chief financial officer’s announcement comes at a time when PC sales are declining. Marie Myers Numerous internet behemoths, including Meta and Amazon, fired thousands of employees as a result of the weak macroeconomic conditions. The HP representative described it as the most difficult choice that might affect employees’ coworkers. Notably, this is the largest layoff following announcements from other internet behemoths, including Facebook-owned Meta, Amazon, and Twitter.
In the discussion that followed the reports, Myers said that a few of the present problems from FY 2022 will continue in FY 2023. According to the study, HP may have to pay $1.0 billion in labor and some other costs related to reorganization and other penalties, “with about $600 million paid in fiscal 2023 and the remainder divided between the next two years.”
There would be 4,000 to 6,000 job losses as a result of the restructuring. The company currently employs about 50,000 people. The reorganization occurs at a time when the majority of businesses, including Amazon.com Inc, Facebook’s parent company Meta Platforms Inc, and Cisco Systems Inc, are drastically reducing their employment bases in preparation for a future economic crisis.
Nobody knows yet which divisions will be hit worst by the layoffs. In a separate statement, HP said that the actions it is taking would cause a 4,000–6,000 person reduction in its staff throughout the next 3 years. Because they affect coworkers we care strongly about, these are the most severe judgments we must make. In order to help people find their next chance, we are dedicated to providing them with care and respect, including assistance with their financial and career needs “.
Global PC shipments fell 15.5% year over year in Q3 2022, according to research firm Counterpoint, which made this observation last month. At the end of the third quarter of 2022, HP had a share of the global of 21%, having sold 12.7 million units, down from 17.3 million in the previous quarter. William Li, the study’s author, wrote, “In 2023, there will still be plenty of ominous clouds in the sky. Additionally, due to weak PC demand, we are lowering our 2022 shipment prediction to a 13% YoY fall “.
HP predicted a profit for the current quarter of between 70 and 80 cents. According to statistics from Refinitiv, analysts anticipate 86 cents on average. As consumers and businesses cut down on spending in the face of decades-high inflation, PC sales have declined from epidemic highs, placing pressure on firms like HP and Dell Technologies Inc.
Dell reported a 6% decline in third-quarter revenue earlier on Monday. Tom Sweet, the chief financial officer of the company, predicted that clients would feel the effects of persistent macroeconomic variables such as inflation and rising interest rates in 2019.
The fourth-quarter revenue for HP fell by 11% to $14.8 billion. In extended trading, the stock of the Palo Alto, California-based business increased by almost 2%.
Along with HP, Amazon and Meta recently kicked off thousands of employees as a result of general economic difficulties. In the next days and weeks, the corporation might let go of a few more workers. Additionally, Twitter let go of half of its staff last month. However, it also plans to recast some significant roles.
According to layoffs.fyi, a website that analyses layoffs in the tech sector, 42,000 employees in US tech companies lost their jobs in just November. In addition, 849 IT companies will lay off nearly 136,000 workers in 2022. However, worries of an economic downturn brought on by this need to be muted. The tech businesses experienced outstanding growth during the epidemic and greatly increased their personnel, but they were unable to achieve their desired sales and profit.
What causes the rise in layoffs?
Sundar Pichai, the CEO of Alphabet, the parent company of Google, had foreseen a tech industry winter earlier this year. He said, in answer to a staff member’s question about budget cuts at an all-hands meeting in September of this year, “We don’t always get to control the macroeconomic conditions.”
A probable economic downturn is a major warning sign. And why would there be a recession on the horizon? Since March of this year, central banks have been frantically trying to contain the global inflation crisis by raising interest rates. Making borrowing and consuming more expensive.
This would eventually have an impact on employment creation and economic growth. The IMF has mentioned the pandemic and continued European war as reasons why predictions for global GDP growth in 2022 and 2023 are pessimistic. The IMF’s predictions for 2022 and 2023 are the lowest since 2001, excluding the financial crisis of 2008.
Edited by Prakriti Arora