Dell Technologies is becoming the latest to lay off thousands of workers as it earmarks to eliminate 6,650 jobs due to plummeting demand for PCs.
The company is experiencing market conditions that “continue to erode with an uncertain future”, co-chief operating officer Jeff Clarke wrote in a memo. The reductions amount to about 5% of Dell’s global workforce, according to a company spokesman.
After a pandemic-era PC boom, Dell and other hardware makers have seen cratering demand. Industry analyst IDC said preliminary data shows PC shipments dropped sharply in the fourth quarter of 2022. Among major companies, Dell saw the largest decline — 37% compared to the same period in 2021, according to IDC. Dell generates about 55% of its revenue from PCs.
Clarke told workers that previous cost-cutting measures, including a pause on hiring and limits on travel, are no longer enough. The department reorganisations, along with the job reductions, are viewed as an opportunity to drive efficiency, the spokesman said.
Layoffs have hammered the tech sector in recent months, including many of Dell’s peers and competitors. HP, similarly exposed to the PC market, announced in November a reduction of as many as 6 000 workers. Cisco and IBM each said they would eliminate about 4 000 workers. The tech sector announced 97 171 job cuts in 2022, up 649% compared to the previous year, according to consulting firm Challenger, Gray & Christmas.
After the reduction, the headcount for Round Rock, Texas-based Dell will be its lowest in at least six years — about 39 000 fewer employees than in January 2020. Only about a third of the company employees are US-based, according to a March 2022 filing.
Dell reported a 6% sales decline in the period ended 28 October and gave a revenue forecast for the current quarter that fell short of analysts’ estimates, saying customers were reducing their purchases of IT. The company is expected to provide further information on the financial impact of the job cuts when it reports fiscal fourth quarter results on 2 March.
“We’ve navigated economic downturns before and we’ve emerged stronger,” Clarke wrote in his note to employees. “We will be ready when the market rebounds.”