Dell lays off 5% of workforce amid slowing PC demand

INFRA

Dell Technologies Inc. disclosed in a regulatory filing today that it plans to let go about 5% of its workforce, or about 6,650 employees.

Dell co-Chief Operating Officer Jeff Clarke wrote in an internal memo that the move is part of an initiative to “better structure us for the future, to better collaborate, reduce complexity, increase speed and to accelerate innovation.” The initiative will also see Dell make a number of changes to its organizational structure.

Dell will reorganize the business units responsible for delivering technical support to customers. Additionally, the company plans to update the structure of its regional sales and DT Select divisions. DT Select, a sales division focused on Dell’s largest enterprise customers, was formed following the company’s purchase of storage equipment maker EMC in 2016. 

Dell’s Infrastructure Solutions Group will undergo changes as well. The group, which is responsible for the company’s data center hardware portfolio, will adjust its engineering investments. Clarke detailed that ISG will shift engineering resources to the “priority offerings that will best serve our customers’ and partners’ needs.”

ISG accounted for $9.6 billion of the $24.7 billion in revenue that Dell generated during its third quarter ended Oct. 28. ISG’s sales grew 12% year over-year in the quarter thanks to increased customer demand for servers, network equipment and data center storage systems.

Dell’s Client Solutions Group, in contrast, experienced a 17% revenue decline during the same time frame. The division is responsible for Dell’s personal computers and other consumer devices. The division’s revenue was hurt by a decrease in worldwide PC demand that has also affected Dell competitors.

International Data Corp. estimates that worldwide computer shipments declined 15% year-over-year in the third quarter. During the fourth quarter, IDC and Gartner Inc. research indicates, the PC market experienced an even steeper 28% decline in demand, the biggest drop on record.

Dell rival HP Inc. is also affected by the decrease in PC purchases. HP’s personal systems revenue segment, which includes its PC division, experienced a 21% year-over-year sales decline in the quarter ended Oct. 31. Shortly after it reported quarterly earnings in November, the company announced plans to lay off 4,000 to 6,000 employees over three years in a bid to reduce costs by up to $1.4 billion annually.

“Remember, we’ve navigated economic downturns before and we’ve emerged stronger,” Clarke wrote in today’s memo to employees. “We’ll prevail as we always do, for our customers, partners and each other. We’ll be more competitive, more focused and find a new level of operational performance. We will be ready when the market rebounds.”

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