HP wields axe following EDS buy

The extent of the fall-out from HP’s acquisition of EDS is starting to emerge as the giant announced plans to slash 24,600 jobs over three years.

HP moved to bolster its HP Services business in May by acquiring 140,000-strong IT services behemoth EDS for $13.9bn (£7.8bn). The workforce reduction programme will streamline the combined services business and is designed to shave $1.8bn off HP's annual cost base.

HP was vague on where the cuts may occur, but said it had “identified synergies in corporate overhead functions”, including real estate, IT and procurement.

The extent of the job cuts will vary by country, HP stressed, but aid nearly half of the reduction is expected to occur in its native US. Around 7.5 per cent of HP’s workforce will be impacted overall.

HP expects to replace roughly half of these positions during the same time period, in a bid to create the correct services mix.

The vendor will record a charge of $1.7 billion in the fourth quarter of fiscal 2008 relating to the restructuring programme.

Peter Skyte, national office for the UK's largest trade union, Unite, condemned the move.

“We will be seeking an urgent meeting with HP management to find out exactly what the company’s intentions are. To date we are dissatisfied with the lack of information provided by HP and EDS," he said.

“Unite are not against change, but we will oppose any compulsory redundancies. We will closely monitor the impact of this proposal announced by HP and take all possible steps to safeguard the interests of our members and the workforce."

Mark Hurd, HP’s chief executive, said: “HP has a strong track record of making acquisitions and integrating them to capture leading market positions. We will deliver on the promise of HP and EDS for our customers and shareholders.”