New Delhi: Job market seems to be turning gloomy not only in the banking space but also in the technology sector, with global IT giant Hewlett-Packard planning to slash close to 25,000 jobs across the world.
However, it was immediately not clear what would be the impact in India, where HP has over 30,000 employees.
“Approximately 7.5% of the combined company’s workforce, or about 24,600 employees, will be affected over the course of the program,” HP said.
HP’s job cut plans come in the midst of huge layoffs in the financial services sector, where thousands of employees have already been given pink slips by firms like Citigroup.
Thousands more job cuts are expected to come soon in the backdrop of Merrill Lynch’s distress sale to Bank of America, Lehman Brothers filing for bankruptcy protection and firms like AIG suffering huge losses.
However, the layoffs at HP are of different in nature and are part of the integration process related to the company’s recent acquisition of EDS.
HP said that nearly half of the reductions would be in the United States. HP has a considerable presence in India with over 30,000 employees working for the firm, but the company’s officials in the country declined to comment on how the Indian workforce would be impacted by the restructuring.
In India, thousands of employees of Lehman and Merrill Lynch are already at risk of losing their jobs, while AIG is also said to be nearing a possible bankruptcy, which could lead to layoffs there as well.
Besides, a number of IT and BPO firms in India have significant exposure to financial services majors of the US and those firms being deep in the financial crisis could lead to the Indian entities losing a number of contract, which could subsequently result into job losses.
HP said in its statement that it intends to implement a restructuring program for the EDS business group that will better align the combined company’s overall structure and efficiency with the operating model that HP has successfully implemented in recent years.
However, the company made it clear that it will provide employees affected by this restructuring program with severance packages, counseling and job placement services.
Once completed, the restructuring program is expected to result in annual cost savings of about $1.8 billion. These savings are net of reinvestments in areas including sales coverage, delivery optimisation and emerging markets, it added.
HP will be recording a charge of $1.7 billion in the fourth quarter of fiscal 2008 relating to the restructuring program.
About $1.4 billion, of which will be recorded as goodwill and $0.3 billion will be recorded as a restructuring charge that will be included in HPs GAAP financial results.
The company has announced it ahead of their security analyst meeting.