HP to cut 24,600 jobs worldwide

Monday, September 15, 2008

US technology giant Hewlett-Packard (HP) said today it would cut 24,600 jobs worldwide over the next three years as part of its integration with computer services firm Electronic Data Systems.

The world-leading computer maker bought the Texas-based business services outsourcing titan EDS in August as part of a $US13.9 billion ($A17.5 billion) deal aimed at creating a global powerhouse in computer services to compete against IBM.

The workforce reduction is intended to "streamline the combined company's services businesses", and once complete is expected to "result in annual cost savings of approximately $US1.8 billion ($A2.2 billion)," HP said in a statement

The job cuts would allow HP "to restructure the EDS business group to streamline costs, invest in growth and drive shareholder value."

About 7.5 per cent of the combined workforce would be affected, with about half of the cuts taking place in the United States, HP said.

In May, HP inked a deal to buy EDS for $US25 per share. After approval by shareholders as well as US and foreign regulators, the acquisition was finalised last month.

The new HP services includes annual revenues of more than $US38 billion ($A47.7 billion) and 210,000 employees, operating in more than 80 countries.

Northern California-based HP is among the world's largest IT companies, with massive data centres and experience in business computing hardware that analysts said would mesh well with the expertise EDS has in outsourcing technical services for companies.

The acquisition more than doubles HP's outsourcing services business, which will be aggressively marketed particularly in Europe and the Americas, company officials have said.

EDS says on its website that it founded the information technology outsourcing industry in 1962 and is now a multibillion-dollar company handling services for banks, hospitals, shops, energy producers and other firms.

Services EDS handles range from call-in centres and financial transaction processing to "desktop outsourcing" in which EDS provides firms with employee computers and refreshes models every few years.

At the time the deal was announced, analysts said HP was expected to impose its fiscal discipline on EDS and consolidate the outsourcing firm's estimated 180 data service centres worldwide.

EDS was founded by Ross Perot, who became a billionaire and US presidential candidate, by paying an incorporation fee of 1,000 dollars and buying unused computer time at an insurance company to process data for other firms, according to a company history.

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