Dell to cut more than 6,600 jobs
Blames PC downturn, says cuts will raise efficiency
American tech giant Dell Technologies is preparing to lay off around 6,650 workers due to a decline in the global PC market.
According to Bloomberg, Dell co-CEO Jeff Clarke told employees in a memo the firm is dealing with market conditions that "continue to erode with an uncertain future."
He added that earlier cost-cutting measures, such as a hiring freeze and travel restrictions, are no longer sufficient.
"We've navigated economic downturns before and we've emerged stronger," Clarke wrote.
"We will be ready when the market rebounds."
The layoffs are expected to impact around 5% of the company's worldwide workforce.
A spokesperson told Bloomberg that the department restructuring and role reductions could help raise efficiency.
The news of upcoming layoffs at Dell adds the PC maker to the growing list of tech firms that have been forced to make similar decisions in recent months, as a result of worsening global economy.
The crisis has heavily affected the tech sector, once a reliable source of employment. Businesses are struggling to balance cost-cutting measures with the need to stay competitive.
In addition to the effects of the war in Ukraine driving up energy prices and the ongoing effects of the Covid-19 pandemic, Dell and other hardware makers are working against a drop in PC demand, after a boom over the last two years.
The fourth quarter of 2022 saw a dramatic decline in PC shipments, according to industry analyst IDC, with Dell experiencing the worst decline among significant corporations: a 37% fall compared to the same period a year ago.
PC sales account for around 55% of Dell's revenue. The company reported a 6% drop in revenues for the quarter ending 28th October, and its revenue estimate for the current quarter fell short of analysts' expectations.
After the announced layoffs are complete, Dell's workforce will be at its lowest level in at least six years. The firm will employ around 39,000 fewer people than in January 2020.
Many tech firms, from Microsoft to Amazon, Meta and Salesforce, have let thousands of employees go since mid-2022 to cope with rising costs and falling demand, caused by inflation and climbing interest rates.
A report from the consulting company Challenger, Gray & Christmas Inc. claims that, with businesses preparing for a future recession, layoffs in the US hit a two-year high in January. According to the report the US tech sector laid off 97,171 employees in 2022: up 649% over the prior year.
In November, HP Inc., which confronts similar challenges in the PC industry, announced plans to terminate up to 6,000 employees. Cisco and IBM, also hardware vendors, have both announced job cuts of roughly 4,000 people.
Facebook-owner Meta said in November it would reduce workforce by 13%, just after Twitter cut almost half its workforce.
Other companies announcing layoffs in recent months include Amazon, Microsoft, Google, Citrix, Tibco, Informatica, Salesforce, Intel, Elastic and Aqua Security.