Dell Technologies Inc., facing falling demand for personal computers, will lay off approximately 6,650 workers, becoming the latest technology company to announce job cuts.
The company is dealing with market conditions that “continue to erode with an uncertain future”. According to a company spokesperson, the layoffs amount to about 5% of Dell’s global workforce.
Dell and other hardware manufacturers have seen a drop in demand following a pandemic-era PC boom. According to preliminary data from industry analyst IDC, personal computer shipments will drop dramatically in the fourth quarter of 2022. According to IDC, Dell experienced the greatest decline among major corporations, with a 37% drop compared to the same period in 2021. PCs account for approximately 55% of Dell’s revenue.
Clarke told workers that previous cost-cutting measures, including a pause on hiring and limits on travel, are no longer enough. The department reorganizations, along with the job reductions, are viewed as an opportunity to drive efficiency, the spokesperson said.
In recent months, the tech sector has been hit hard by layoffs, including many of Dell’s peers and competitors. HP Inc., which is also heavily invested in the PC market, announced a 6,000-person layoff in November. Cisco Systems Inc. and International Business Machines Corp. both announced layoffs of approximately 4,000 employees. According to consulting firm Challenger, Gray & Christmas Inc., the tech sector announced 97,171 job cuts in 2022, an increase of 649% from the previous year.
Dell’s headcount will be the lowest in at least six years following the reduction, with approximately 39,000 fewer employees than in January 2020. According to a March 2022 filing, only about one-third of the company’s employees are based in the United States.
Dell reported a 6% sales to decline in the period that ended Oct. 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. The company is expected to provide further information on the financial impact of the job cuts when it reports fiscal fourth-quarter results on March 2.
“We’ve navigated economic downturns before and we’ve emerged stronger,” Clarke wrote in his note to employees. “We will be ready when the market rebounds.”
