HP to shed 27K workers by 2014

update IT vendor plans exit of 8 percent of global workforce as part of multi-year restructuring, and will use money saved to invest in areas such as cloud computing and security.

update Hewlett-Packard (HP) plans to part ways with 27,000 employees by the end of its 2014 fiscal year and use the annual savings to invest in "people, processes and technology", particularly in the areas of cloud computing, big data and security.

In a statement released Wednesday,the company said the multi-year restructuring plan would see some 8 percent of its workforce leaving as of Oct. 31, 2011. The layoffs will vary by country, based on local legal requirements and consultation with employee representatives as appropriate, it added.

The restructuring is expected to reap annual savings in the range of US$3 billion to US$3.5 billion, of which the majority will be invested back into the company, particularly on innovations around the three areas in cloud, big data and security.

"These initiatives build upon our recent organizational realignment, and will further streamline our operations, improve our processes, and remove complexity from our business, said Meg Whitman, HP president and CEO.

"While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long-term health of the company."

The IT vendor also revealed its net revenue for the second quarter of 2012 reached US$30.7 billion, which is down 3 percent from the previous year's.

Commenting on these announcements, Jillian Mirandi, an analyst at Technology Business Research (TBR), said in statement Thursday that she "validates" HP's executive vision in terms of the restructuring as feedback from the research firm's interviews showed that the vendor's market approach was "fragmented".

She also believes the majority of the job cuts will be across the services and hardware business units, but the software group will also be affected, albeit minimally. She identified employees working for the Autonomy division, which was bought over by HP last August, as the most vulnerable. Its headcount has decreased starting, with former CEO Mike Lynch stepping down to be replaced by HP's chief strategy officer and senior vice president of software, Bill Veghte, she noted.

"Given the elimination of these jobs and Whitman's recent commitment to refocus on R&D and innovation within the software group and the company overall, TBR believes a greater overall shift is underway to increase efficiencies and improve profitability," Mirandi stated.