HP restructuring expects to generate savings in the range of $3-3.5 bn exiting fiscal year 2014, the majority being reinvested in the company. Enabling investments in people, processes and technology will allow HP to accomplish the restructuring effort and to generate the savings.
HP expects to use the savings to boost investment in innovation around its three areas of strategic focus: cloud, big data and security, as well as in other segments that offer attractive growth potential.
The company is offering an early retirement program, so the total number of employees affected will be impacted by the number of employees that participate in the early retirement plan.
Workforce reduction plans will vary by country, based on local legal requirements and consultation with works councils and employee representatives, as appropriate. In 2009 HP cut 250 jobs in Scotland, and in 2010 it created 700. Currently in all the UK site has some 16,499 employees.
HP also expects to achieve additional savings from non-headcount cost reductions, including supply chain optimisation, SKU and platform rationalisation, go-to-market strategy simplification and business process improvement.
HP president and CEO (right) Meg Whitman, said. "While some of these actions are difficult becausethey involve the loss of jobs, they are necessary to improve execution and to fund the long term health of the company. We are setting HP on a path to extend our global leadership and deliver the greatest value to customers and shareholders."
Among all the investment intentions "It will also further leverage the capabilities of Autonomy and Vertica across the entire HP portfolio."
Tim Jennings, chief IT analyst at Ovum comments that "Mike Lynch’s departure from HP seems counter-intuitive in light of the company’s intention to reinvest in R&D following its planned layoffs. Lynch is a technology visionary, and parting company on the basis of poor sales execution in the division, indicates that HP has struggled to create a clear vision for how to leverage its very expensive acquisition.
"Since the acquisition, HP has allowed Autonomy to run autonomously (admittedly somewhat at Lynch’s behest), including maintaining separate R&D functions, but thi
s has made it difficult to benefit from the company’s core technology within the broader HP portfolio, just at a time when it is one of the hottest areas for enterprise investment.
"HP would have been better advised to utilise (right) Lynch’s talent across all of its software business,rather than to allow him to remain at arm’s length, and subsequently land him with the blame for poor sales execution."
Be fascinating to discover what Lynch, a covetable headhunt, will get up to now.