San Francisco - World's largest computer and printer maker Hewlett-Packard Co. (HP) said it would lay off 24,600 employees or nearly 8 percent of its workforce over the next three years while it takes $1.7 billion one-time charge as a part of its plan to integrate the newly acquired Electronic Data Systems Corp (EDS) with itself.
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"With the acquisition of EDS, HP has the industry's most comprehensive portfolio of IT solutions to help customers manage and transform their technology environments," HP said.
The job cuts, the Palo Alto, California-based company said, would allow HP "to restructure the EDS business group to streamline costs, invest in growth and drive shareholder value."
According to the company, most the job cuts would take place in the US coming from within the EDS ranks, with about half the jobs being replaced in new areas of its service business.
At the time the merger was announced in May, HP had 1,78,000 employees on its books and EDS had 1,42,000 employees. In India, HP has over 30,000 employees.
The vast majority of the job cuts would focus on eliminating overlapping jobs at EDS in corporate functions such as legal, accounting, information technology (IT), human relations, procurement and other support departments as well as excess office space, HP said.
The company said it would provide employees affected by this restructuring program with severance packages, counseling and job placement services.
The $13.9 billion acquisition of EDS, a deal which closed last month, strengthened HP's presence in the US and in Britain, two strong markets for EDS, both among government agencies and commercial clients, and made HP the world's second largest provider of IT services, up from No.5 previously. IBM is currently the world's largest provider of IT services. HP and EDS had a combined $38.8 billion in services revenue last year. In comparison, IBM had $51.4 billion in total technology and business-services revenue in 2007.
The deal also made HP the No.1 provider of "applications management" i.e. providing maintenance and outsourced management of older software systems.
"We are good at integrating companies...I believe we will do it well," HP Chairman and CEO Mark Hurd said, recalling the company's 2002 mega-merger with Compaq Computer and a series of software deals HP has made in recent years to bolster its business of helping companies automate and manage their networks and systems.
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