Hewlett-Packard Co. has announced plans to cut 27,000 jobs in an effort to turn around the ailing company. This would be the largest payroll purge in HP’s 73-year history. The job cuts and other austerity measures are expected to save the company $3 billion to $3.5 billion annually. The company expects the overhaul to be completed by October 2014.
Eight months ago, HP hired Meg Whitman as CEO in order to turn the company around. Whitman warned, “turning HP around is going to be a lot of hard work. It’s going to take time. But we know what needs to be done.” She added, “While I wouldn’t say we have turned the corner, we are making real progress.”
Nearly 8% of HP’s employees will be affected by the cuts. The company announced that it would try to avoid as many layoffs as possible by offering early retirement packages to many of its employees. HP currently has almost 350,000 employees.
HP seems to have been left behind as its rivals raced ahead with more innovative products and services. HP’s sales of personal computers and printers have been declining sharply. The drop in sales has been attributed to more people spending more of their time surfing the Web on phones and tablets.
Competition from IBM and Oracle have stymied the company’s efforts to sell more business software and consulting services. HP’s latest quarterly results were better than analysts had projected, even though HP’s earnings and revenue declined from a year ago. Whitman’s plan is to position the company where it can respond more quickly to customer needs and to boost research and development to spur innovation.
