Home News HP drops work as recession looms for Big Tech

HP drops work as recession looms for Big Tech

by SuperiorInvest

Big Tech is gearing up for a rough ride as HP Inc. has said it will lay off 10% of its workforce, Dell has warned that sales are falling, and Google is preparing to mark 10,000 employees as underperforming, a potential prelude to mass layoffs.

The cuts come as a potential recession and post-pandemic decline in revenue has led many tech companies to reassess staffing needs. HP plans to cut 4,000 to 6,000 jobs over the next five years to save $1.4 billion a year.

“At this point, it is reasonable not to assume that the market will turn around during 2023,” said HP CEO Enrique Lores.

Key things

  • HP to lay off 10% of its workforce after disappointing fourth quarter results
  • Dell said revenue fell in the third quarter, although it did not announce layoffs
  • Google to lay off up to 10,000 employees it labels non-performing

More than 137,000 white-collar workers at 850 different technology companies have already lost their jobs this year, and thousands more are expected to be laid off. For some companies, the immediate impulse was to rebalance staffing after over-hiring during the pandemic boom. A bigger factor is the fear that a recession is looming, leading to efforts to streamline their operations. All of this comes with wages rising next year to catch up with inflation.

HP reported its fourth-quarter results on Tuesday, which showed an 11% drop in revenue for the quarter along with its cost-cutting plan. Rival PC maker Dell reported a 6% drop in quarterly revenue this week, along with a 17% drop in the unit that includes PC sales.

“We expect continued global macroeconomic factors, including slowing economic growth, inflation, rising interest rates and currency pressures, to weigh on our customers,” Dell Chief Financial Officer Tom Sweet said in an earnings call on Monday.

Last year, HP hired 10,000 employees, bringing its workforce to 61,000. Dell, like HP, also grew last year but announced no job cuts.

Google Performance Rating

Alphabet Inc., the parent company of Google, may be looking to cut its workforce. The company recently changed its performance appraisal system to give 10,000 workers, 6% of its workforce, poor scores, a sign that they could be fired. Previously, it targeted 2% of workers.

Billionaire Alphabet investor Christopher Hohn wrote to the company earlier this month urging it to cut costs. He said the company has increased its workforce by 20% since 2017.

“The growth is excessive, both relative to historical headcount growth and relative to what the business requires,” he wrote.

Many tech companies are laying off employees after a big drop in revenue. Meta Platforms, Inc. said it would cut 13% of its workforce, and the New York Times reported that Amazon.com, Inc. seeks to reduce the number of employees by 10,000.

Alphabet shares have fallen 33% over the past 12 months, outpacing declines in HP and Dell, compared with a -29% decline in the tech-heavy Nasdaq Composite Index.

Correction – November. 23, 2022: A previous version of this article incorrectly stated that Dell had reduced workloads.

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