July 25th, 2013
HP, Google/Motorola Mobility continue their downsizing, Zynga layoffs are no game
Computer and network company layoffs so far this year look relatively light vs. those in recent years, when the numbers of those losing their jobs at individual companies frequently rose into the multiple thousands, sometimes hitting five figures.
This has taken place against a backdrop of an overall improving job market, with positions being added and unemployment holding steady, according to the June Department of Labor numbers. What’s more, market watchers such as Dice have found that tech-focused hiring managers expect to hire more people in the second half of the year than they did in the first half.
[Biggest tech industry layoffs of 2012]
This isn’t all to say that significant numbers of people at the companies Network World tracks, in addition to IT staff at all sorts of organizations (much harder to track these layoffs in aggregate), haven’t lost their jobs this year or will in the months to come based on corporate restructuring plans.
HP has been among the most aggressive in making cuts over the past couple of years under CEO Meg Whitman, who has outlined a $3.5 billion cost reduction plan that is being achieved in large part through layoffs and early retirements across what had been a 350,000-person staff last year. HP has also been cutting costs by adopting more cloud computing services. Whitman said in March that the company had reached the halfway mark in its restructuring, with 15,000 cuts to go between then and the end of next year.
HP rival IBM has also been trimming its workforce, though it’s always difficult to put a finger on just how many cuts IBM is making. An employee organization called Alliance@IBM said 1,600 employees have lost their jobs this year, with more cuts possibly on the way. Computerworld reported in June that IBM is believed to have more employees in India (112,000 as of last fall) than in the United States, where the number is said to be below 100,000.
Another big computing player, EMC, has said it will lay off more than 1,000 people this year as part of a restructuring designed to slash $80 million in spending (though the company has also said it is hiring people to focus on growth areas).
EMC subsidiary VMware announced in January it would zap some 900 jobs from its nearly 14,000-person workforce, though it is also adding about as many jobs CEO Pat Gelsinger at the time called the move a “realignment of resources” as the company sharpens its focus on software-defined data centers and hybrid cloud services.
“This includes shifting talent to new roles that support our growth opportunities as well as some targeted head count reductions,” he said, according to an IDG News Service report.
Traditional networking companies have also whacked jobs this year. This includes market leader Cisco, which cut its workforce by about 500 people in May. Cisco at the time said: “We routinely review our business to determine where we need to align investments based on growth opportunities. Yesterday, Cisco performed a limited restructuring that will impact less than 1 percent of our population globally.”
Separately, Extreme Networks revealed in a January financial filing that it was cutting 13% of its workforce (about 90 jobs) as part of an effort to slash spending by $7 million per quarter. Extreme, which has struggled to grow its market share in Ethernet switching, had a similar-sized layoff 18 months before.
The year began very roughly for Nokia’s IT professionals, as more than 800 were transferred to outsourcing firms and another 300 lost their jobs. Nokia said at the time: The goal is to reduce operating costs and create an IT organization “appropriate for Nokia’s current size and scope.”
Motorola Mobility employees have been feeling the results of the company’s buyout by Google in 2011. Motorola Mobility said in March it was cutting 1,200 staff, in addition to 4,000 axed last year as the company refocuses on high-end devices. Earlier this month, Google acknowledged in a financial report cutting more than 5,000 jobs at Motorola Mobility last quarter. Most of the job cuts last quarter were the result of a deal between manufacturing company Flextronics and Motorola.
On the consumer side, social games maker Zynga in June said it was eliminating 18% of its workforce, or about 500 jobs, in an effort to reduce costs and hone its focus on mobile. Zynga has struggled mightily since going public in 2011 and despite its high profile relationship with Facebook.
According to the latest numbers from outplacement firm Challenger, Gray & Christmas, employers announced 8.5% fewer job cuts through the first half of 2013 vs. the year-ago six-month period. The financial and retail industries have been particularly hard hit, and cuts surged in the computer industry in June. Spending cuts by the feds related to sequestration and concerns by others related to rising healthcare costs, are among some of the broader workforce reduction drivers, according to the outplacement firm. But here’s the bright side of things:
“Right now, job cuts are on track to the have the second lowest annual total since 2000,” according to Challenger, which notes the third quarter is typically the slowest period for downsizing. “Unless there is a major shock to the economy in the second half of 2013, we could see layoff activity decline continue toward pre-2000 levels.”