As the demand and sales of PCs continue to drop in the midst of an economic slowdown and subsidence of COVID-induced surge, Dell is the latest to join a list of technology conglomerates, to lay off employees in the thousands. This comes months after it’s hardware peers HP and Lenovo, both announced similar layoffs.
In an internal memo, Dell co-CEO Jeff Clarke revealed that its cost-cutting measures – which included a hiring freeze, travel restrictions, and a reduction in expenditure on outside services, are “no longer enough.” Its insufficiency has now persuaded Dell to eliminate around 5% of its global workforce – or around 6650 employees – as it deals with plummeting demand for PCs and tanking stocks.
This development is unsurprising, especially since Dell clocked significant losses in the winter quarter. The holiday quarter saw its shipments drop by 37% in the quarter – something that can be attributed to inflation, higher interest rates, and fears of an economic recession. Its share of the global PC market amounted to 16.7% (as of December 2022).
The memo does not specify which departments of the computer manufacturer will be most impacted by the latest round of layoffs. “Unfortunately, with changes like this, some members of our team will be leaving the company. There is no tougher decision, but one we had to make for our long-term health and success. Please know we’ll support those impacted as they transition to their next opportunities,” Clarke wrote in the internal memo, which was later posted on the company’s official blog post.
The fresh round of layoffs – if Dell follows through and enacts it – will take the total number of Dell employees across the globe to its lowest figure in six years – with a reduction of approximately 39,000 employees compared to January 2020 (at that time, the company had around 165,000 full-time roles.) One-third of the total workforce is based in the US. “We’ve navigated economic downturns before and we’ve emerged stronger,” said Clarke. He added that the reduction of the workforce was essential for Dell’s “long-term health and success,” and that department reorganizations were being viewed as an opportunity to drive efficiency and boost innovation.
“Dell continuously assesses our business to ensure we’re set up to deliver the best innovation, value, and service to our customers and partners. This is especially important as economic uncertainty has continued. Since June, we paused external hiring and reduced spending to navigate a challenging global environment. We have further opportunities to drive efficiency through department reorganizations, which has resulted in a reduction of team members across the globe. This is a difficult decision that was not made lightly, and we’ll support those impacted as they transition to their next opportunity,” the company said in a statement.
Apart from the layoffs, Dell will be bringing its Regional Sales and Dell Technologies Select (DTS) teams under one leader. As per the memo, this would help its support teams “align to a similar structure and streamline their functions.” Additionally, the company will integrate its support services into ISG and CSG, while shifting teams and resources to “priority offerings that will best serve our customers’ and partners’ needs.”