Ahead of splitting into two companies, Hewlett-Packard has announced it will eliminate more than 10% of its workforce, with most of the job cuts coming from the HP Enterprise spinoff.
The company expects to save about $2.7 billion by cutting 25,000 to 30,000 jobs from HP Enterprise and 3,300 from the smaller HP Inc. spinoff. Effective in November, HPE will sell things like computer servers, data storage, software, and services to business, while HP Inc. will focus on printers and personal computers.
“These restructuring activities will enable a more competitive, sustainable cost structure for the new Hewlett Packard Enterprise,” HP CEO Meg Whitman said in a news release. “We’ve done a significant amount of work over the past few years to take costs out and simplify processes and these final actions will eliminate the need for any future corporate restructuring.”
As part of a restructuring announced in 2012, 54,000 jobs were previously cut at the company. Hewlett-Packard had 302,000 workers at the end of October 2014, down from a peak of about 350,000 in 2011.
According to The New York Times, the latest round of cuts will affect, in particular, jobs at call centers and other service centers in developed countries. “HP plans to automate many of the jobs, and build out positions in countries like India and Costa Rica,” the Times explained. “The services business had been largely dependent on just a few customers, and in 2014 it lost important accounts.”
HP also said it is moving more of its workers to lower-cost locations as part of its cost-cutting efforts. Forty-two percent of employees in the unit of HPE called enterprise services currently work in low-cost locations and executives said they plan to increase that figure to 60% by 2018.
“HP absolutely needs to fix enterprise services, PCs, and servers across both its companies,” Anand Srinivasan, an analyst at Bloomberg Intelligence, told Bloomberg. “Some of the issues are market related and some of them are HP-specific.