Workforce cuts will not hurt channel, claims HP

Vendor aims to reassure partners and fill in details of the job cuts it plans to introduce over the next six months

Hewlett-Packard (HP) has been quick to inform its UK channel partners that the planned 10 per cent cut in its global workforce will have no effect on its indirect strategy.

Chief executive Mark Hurd last week announced a total of 14,500 compulsory job cuts, which will be introduced over six quarters. HP claimed the cuts will save $1.9bn.

Although HP has not revealed which regions will be affected, it has admitted that most of the cuts will come in support functions such as IT, HR and finance.

The remainder will be made inside business units in areas where work can by reduced by streamlining business processes, the vendor said.

In addition, HP is axing its customer solutions group, which handles sales to enterprise, SMEs and public-sector customers. It will merge the sales function into three other business units: the technology solutions group, the imaging and printing group and the personal systems group.

Gary Allden, head of corporate communications at HP, said the vendor is still committed to its channel.

“Our sales teams are the least affected by this announcement. The aim is to streamline our processes. The management layers within HP are quite complex and it will make it easier to do business with us,” he said.

“We intend to improve our relationship with the channel, and we are extremely committed to working with partners.”

Eamonn Kennedy, analyst at Ovum, predicted that HP is likely to have more announcements in the pipeline.

“Unsurprisingly, sales and R&D are not going to be affected by the job cuts. Hurd needs a huge R&D spend to differentiate HP from Dell, and he certainly does not need a demoralised sales force to add to his challenges,” he said.

“The redundancies will save HP some operating expenditure, but Hurd will have to pursue some other options if he wants to make HP more efficient and effective.”

Sue Richards, managing director of VAR EBM, said was confident the move will not affect business.

“No doubt there will be problems with low morale at HP for a while, but in the past six months, from a partner’s point of view it has been easier to deal with the company,” she said.

“We are shifting more kit than ever before, and although prices have dropped, the demand is still there. As long as HP realises that it has some very good partners out there, we are not too concerned.”