Dell Cutting 5 Percent of Workforce

Dell announced on Monday that it was cutting five percent of its workforce, which amounts to about 6,650 jobs.

The five percent cut is described in a Jan. 6 Securities and Exchange Commission 8-K filing, which characterized the action as a strategic realignment in response to a "challenging global economic environment." Jeff Clarke, Dell's vice chairman and co-chief operating officer, issued a message as well, included with the filing, that offered a few more details.

Clarke indicated that past cost-cutting efforts at Dell, such as putting a pause on external hiring and limiting travel, "are no longer enough" to address the "uncertain future" and "downturn impacts" from market conditions. He described new efforts to streamline Dell's Global Sales organization, as well as controlling costs for the company's Infrastructure Group and Client Solutions Group.

"Unfortunately, with changes like this, some members of our team will be leaving the company," Clarke added.

Dell had had about 133,000 employees in January 28, 2022, according to its recent 10-K filing. The five-percent personnel cut will lower Dell's headcount to its lowest in six years, according to a Bloomberg account.

Dell's fiscal third-quarter 2023 earnings, reported in November, showed an overall 6% decrease in revenue. Dell's Infrastructure Group revenue increased 12% during the period, but its Client Solutions Group revenue showed a 17% decrease. Dell's PC business, part of the Client Solutions Group, represents more than 40 percent of its business, according a Dell Q3 slide.

IDC this month described a PC slump that occurred during the 2022 holiday quarter, with PC shipments "down 28.1% from the prior year." A PC boom that occurred during COVID-19 pandemic times "is over for the PC market" and current global economy concerns could lessen future PC demand, IDC indicated. However, IDC is predicting that "portions of the PC market could return to growth in late 2023 with the overall market following in 2024."

IDC showed Dell in third place for PC shipments worldwide in Q4 2022, with 16.1 percent market share, trailing HP (19.6 percent) and Lenovo (23 percent).

Dell is in fourth place among tablet makers, with 13.4 percent market share, according to an IDC worldwide tablet market report. This report showed an overall "flat growth of 0.3% year over year in the fourth quarter of 2022" for tablets.

Dell is announcing its 5 percent personnel cut after similar tech industry pronouncements. For instance, Google recently announced a 12,000 cut in personnel, while Microsoft described cutting 10,000 jobs. Microsoft was similarly affected by the PC slump, with its fiscal Q1 results showing a 15% decrease in Windows OEM revenue.

About the Author

Kurt Mackie is senior news producer for 1105 Media's Converge360 group.


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