Layoffs planned for HP Enterprise Services

The spin-off was announced a year ago as markets shifted from PCs to mobile devices that had reduced demand for numerous company’s key products (See: Hewlett-Packard to split corporate hardware and PC and printer businesses).

In an interview with CNBC, Meg Whitman, HP’s CEO, noted that automation and outsourcing will come along with these layoffs.

According to Bloomberg, HP’s worker numbers have been shrinking for three years, and around this time last year had about 302,000 employees versus the 350,000 or so it had in 2011.

In its announcement, the company gave no further details of the job losses but it is understood the majority will come from the Enterprise Services division.

“These restructuring activities will enable a more competitive, sustainable cost structure for the new Hewlett Packard Enterprise”, HP chief executive Meg Whitman said. However, the CEO added that the “final actions will eliminate the need for any future corporate restructuring”. The jobs cull will cost $2.7bn to carry out but will save the same amount in running costs every year, says HP. However, Hewlett-Packard remains one of the world’s largest technology companies, with revenues this year expected to top $50bn.

The stock fell 1.4 percent to $26.73 in extended trading on Tuesday.

Hewlett Packard said Tuesday afternoon that 25,000 to 30,000 people will leave the enterprise division as part of a planned spinoff.

HP plans to officially divide into two businesses on 1 November, allowing Hewlett Packard Enterprise to focus more on its growing cloud and data analytics portfolio.

“These cuts are never easy, but it’s the right thing to do because we have to now get to the next phase of the HP journey”, she said. It is also hoped that the soon to be spun off ES business unit will achieve about $2 billion in gross annualized cost reductions.

The cuts will be part of a $2.7 billion charge that will start to show up in earnings for the company’s fourth quarter, which ends in October.