If the trends are any indication, we’re either already in a global recession, or will be entering one very soon. After tech giants like Meta, Twitter, Microsoft, Amazon, and many others, now computer maker HP Inc. has revealed their plan to let go of up to 10% of their entire workforce in the coming three years.
HP Inc. Announces Layoff Plan
On Tuesday, that is November 22, 2022, computer maker HP Inc. shared its reports for the entire year of Fiscal 2022, along with the fourth quarter results. Along with this, the company also announced their Dividend Increase and Future Ready Transformation plan.
As a part of this plan, HP revealed their strategy to eliminate approximately 4,000 to 6,000 employees in an attempt to cut down on costs. Currently, HP has around 61,000 employees globally. So, that means the company is planning to lay off around 10% of its entire global workforce by the end of Fiscal 2025.
Deteriorating Sales A Reason For HP Layoffs
When the pandemic began, demands for computers and laptops rose tremendously. Everybody either wanted to work from home or play games or simply spend some time on the internet. This meant more people buying computers in an absolute frenzy.
However, this demand didn’t last for long. For quite some time now, the demand for computers has been declining. In fact, as per the forecast made around this, it is assumed that there will be a 10 per cent decline in computer sales in the coming fiscal year. Commenting on this, Chief Executive Officer Enrique Lores said in an interview, “We expect a challenging market environment.”
As a result of this declining demand and the forecast of a further decline, HP has decided to eliminate around 4,000 to 6000 of its employees.
Effect Of HP Layoffs On The Stock Market
The last time HP let go of their employees was three years ago, in the year 2019. At that time, HP had announced it would eliminate anywhere between 7,000 to 9,000 employees globally. Post this announcement, shares of the PC maker had fallen by 9.6% on the very next day.
However, in the case of the recent announcement, the effect has been quite the opposite. After the announcement made by HP on November 22, the prices of HP shares have risen by as much as upto 1% in extended trading.
More On The Future Ready Transformation Plan
HP’s latest announcement made news especially due to its Future Ready Transformation plan. With this plan, HP aims to ensure significant cost savings through digital transformation, portfolio optimization and operational efficiency. This includes the much-talked-about layoffs that may happen in the company in the coming three years, i.e. by the end of fiscal 2025.
The company plans to cut down on labour costs by eliminating 4,000 to 6,000 employees. If everything goes as per plan, the company estimates to have an annualized gross run-rate savings of at least $1.4 billion by the end of fiscal 2025.
This includes around $1 billion in costs including restructuring and other charges. Out of this, around $600 million will be incurred in fiscal 2023, which ends October 31, 2023. The remaining $400 million will be split evenly between the 2024 and 2025 fiscal years.
Other Tech Companies With Recent Layoffs
Many companies across the world have laid off their employees in recent times. This list includes tech giants like Meta, Google, Twitter, Amazon, and several others. According to the announcement made by Mark Zuckerberg, Meta has reportedly laid-off approximately 11,000 staff from their global workforce.
Meanwhile, Amazon is planning to cut down on costs by eliminating almost 10,000 employees from their entire workforce. While these companies laid off a comparatively lesser percentage of employees, Elon Musk led Twitter was seen loosing around 50-70% of their workforce.
In short, several companies fired their staff, and many more may follow suit, just like HP.
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