HP's imminent split into two companies—the PCs-and-printers HP Inc, and the enterprise services Hewlett-Packard Enterprise—is going to come at a high cost in both personnel and restructuring, the company told analysts today.
Tim Stonsifer, who will be made CFO of Hewlett-Packard Enterprise once the split occurs on November 1, has said that there will be some 25-30,000 positions cut of around 300,000 total, with most losses coming from its Enterprise Services division. The cost of the restructuring will be around $2.7 billion, with HP claiming that it will lead to savings of $2.7 billion a year. The cost cuts of the split were previously estimated at around $2 billion a year in Enterprise; another $700 million in savings have been found elsewhere.
Enterprise Services—HP's IT outsourcing service—currently makes up about 40 percent of the new Hewlett Packard Enterprise's revenue, but it has struggled with declining revenue; it's down $4 billion a year since 2011. The group's head, Mike Nefkens, has outlined plans to move more employees offshore, and consolidate them onto fewer sites. His goal is to have 60 percent of the workforce in countries with low labor costs by 2018. HP got into the Enterprise Services business when it bought EDS in 2008.
These cuts come on top of some 55,000 already let go by Meg Whitman in a series of cuts that started in 2012 at a total cost of around $5.5 billion, for a total of 85,000 lost jobs under her reign. Whitman will become president and CEO of Hewlett-Packard Enterprise, and chairperson of the board of HP Inc. The goal of the split is to produce two companies that are "simpler and more nimble." While that remains to be seen, the new companies will certainly be smaller.