Dell to lay off 5% of workforce amid PC slump

The layoffs also add to the thousands of cuts in the tech industry whose outlook has been shaken by a drop in spending by consumers and businesses due to rising interest rates.

Mon, 06 Feb, 2023 - 11:14

Dell Technologies is eliminating about 6,650 roles as it faces plummeting demand for personal computers, becoming the latest technology company to announce thousands of job cuts.

The reduction amounts to about 5% of Dell’s global workforce, the company said in a regulatory filing early on Monday.

“What we know is market conditions continue to erode with an uncertain future,” Co-COO Jeff Clarke wrote in a blog post on the company’s website.

“The steps we’ve taken to stay ahead of downturn impacts, which enabled several strong quarters in a row, are no longer enough,” he said.

Mr Clarke said these previous cost-cutting measures included a pause on hiring and limits on travel.

In Ireland, the company employs around 5,000 people across its sites in Cork, Limerick and in Dublin.

The company did not respond to questions relating to how its Irish workforce will be impacted by the cuts, but government said it will provide an update on the situation soon.

The announcement from Dell comes as the Minister for Enterprise, Trade and Employment Simon Coveney is on a trade mission in the US discussing the tech slowdown with some of the biggest players in the industry.

Layoffs have hammered the tech sector in recent months, including many of Dell’s peers and competitors. The tech sector announced 97,171 job cuts in 2022, up 649% compared with the previous year, according to consulting firm Challenger, Gray & Christmas.

The slimdown of the sector has been fuelled by inflation effecting e-commerce and interest rate hikes.

HP, similarly exposed to the PC market, announced in November a reduction of as many as 6,000 workers.

After a pandemic-era PC boom, Dell and other hardware makers have seen cratering demand.

Industry analyst IDC said preliminary data show personal computer shipments dropped sharply in the fourth quarter of 2022.

Among major companies, Dell saw the largest decline of 37% compared with the same period in 2021, according to IDC. Dell generates about 55% of its revenue from PCs.

The job cuts “affirms our expectation of a delayed PC rebound in 2023 and suggests further sales erosion in the company’s client solutions group, especially in H2,” Woo Jin Ho, senior analyst at Bloomberg Intelligence, said in a note.

After the reduction, the headcount for Texas-based Dell will be its lowest in at least six years, with around 39,000 fewer employees than in January 2020, before the company spun out its stake in VMware.

Only about one-third of the company employees are US-based, according to a March 2022 filing.

“We’ve navigated economic downturns before and we’ve emerged stronger. We’ll prevail as we always do, for our customers, partners and each other,” said Mr Clarke.

Dell reported a 6% sales decline in the period ended October 28 and gave a revenue forecast for the current quarter that fell short of analysts’ estimates, saying customers were reducing their purchases of information technology.

- Reporting by Bloomberg and the Irish Examiner