update Hewlett-Packard on Monday announced plans to cut tens of thousands of jobs over the next three years as it digests its recent purchase of EDS.
The company expects to replace roughly half of these positions over the next three years to create a global workforce that has the right blend of service delivery capabilities to address the diversity of its markets and customers worldwide.
HP announced plans in May to acquire the computer services firm for US$13.9 billion. The deal closed in August. The company said that, once it has finished with the cuts, it expects the moves to save US$1.8 billion in costs annually. It said it does plan to reinvest in other areas.
On the accounting side, HP said it will record a US$1.7 billion charge in the fourth quarter of fiscal 2008 related to the restructuring program. The company said that, of that charge, US$1.4 billion will be recorded as goodwill, and US$300 million will be recorded as a restructuring charge that will be included in its financial results.
The company positioned the announcement as part of an effort to "streamline" its costs. It plans to discuss the move at an analysts' meeting, set to kick off shortly.
"HP now has the broadest technology capabilities in the market to meet customer needs today and in the future," CEO Mark Hurd said in a statement. "HP has a strong track record of making acquisitions and integrating them to capture leading market positions. We will deliver on the promise of HP and EDS for our customers and shareholders."
HP discussed the job cuts as part of a meeting under way for financial analysts.
Analyst: Move both good, and bad, for Asia-Pacific region
According to Phil Hassey, Springboard Research's vice president of services and country manager for Australia and New Zealand, the "removal of the natural duplication" will impact higher cost markets such as Australia, Hong Kong and Singapore.
However, lower cost markets could stand to gain, he said in an e-mail Tuesday to ZDNet Asia. "I would expect that--in relative terms--the greatest losses to be in Australia and New Zealand in the region; conversely, India, China and the Philippines will benefit from the resource cost realignment."
The ability to manage the integration of the two companies well, will be key, added Hassey. In that regard, HP has a "pretty good track record", he pointed out.
Another issue to consider is the leadership in the local markets, said Hassey. HP management, he suggested, could take a more prevalent role in Singapore, for instance, but EDS leaders should have a dominating presence in markets such as Australia and New Zealand.
When contacted, an HP spokesperson was unable to provide information on the estimated job cuts in Asia.
This article was first published as a blog on CNET News.com.
Vivian Yeo of ZDNet Asia contributed to this article.
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