IT Company Hewlett Packard said that it is considering cutting about 20,000 jobs in order to help the company in contending with the fading demands of computers.
Hewlett Packard is working with the consultancy firm McKinsey and Co. to make the plans of cutting out jobs. The move is inspired from the declining demand of PCs, who have been overshadowed by tablets and iPhone.
Hewlett Packard is the largest computer and printer manufacturer and is now striven to cut down cost and expenditure. According to the sources, another cost cutting method which HP is thinking is giving the employees early retirement offers.
HP is considering cutting 20,000 jobs which may increase to 30,000 if required; it is the 8 per cent of HP’s total workforce. It includes cutting down 10,000 to 15,000 jobs from Hewlett Packard enterprises group, a seller of information technology services.
However, these changes are not final and may change in future, though cutting jobs will certainly give HP a boost which they require. According to an estimate, cutting 18,000 jobs will save about $1.2 billion and will also add 50 cents to HP’s annual per share earnings.
Focus on research and development
Cutting down jobs and adopting cost saving measures will help the company in saving each billions of dollars which will be used in research and development of the company.
Current CEO of Hewlett Packard, Meg Whitman when joined the company last September said that she will be spending large amounts on research and development for bringing more innovation in HP. Before Meg, company had cut research and development budget immensely, but she is not doing that.
Effect on stock market
After the news first flow into the market an uphill trend was noticed in the shares of Hewlett Packard. The shares of the company rose to $22.27, and gained 3 cents at the end of the day and closed on $22.06.
In this year the stock of Hewlett Packard has dropped by 14 per cent.