by Yogesh Gupta

9 bloodiest tech giants’ layoffs of 2016

Aug 25, 2016

It’s hara-kiri across major technology giants as they slash jobs this year. 

Technology giant Cisco’s layoff of 5500 employees last week, caused enough and more concern in the technology industry. And the business health of well-established tech vendors and their ecosystem of key stakeholders in future. 

Cisco is not the sole vendor that’s going leaner in its workforce this year.

 Also read: Cisco, Summers and Layoffs

Tech giants Symantec, Intel, Microsoft, IBM, too have announced their lay-off plans in 2016.

Most traditional hardware centric vendors are primarily feeling the heat due to the technology trends moving rapidly to software-based world.

Intel and HP Inc., faced the slumping PC sales since past few years too challenging to continue with existing workforce growth. Microsoft did most cuts in its ‘not so good’ mobility department in 2016. Symantec’s disappointing numbers in first quarter meant a CEO change and announcing layoffs of 1200.

The new age technologies like cloud and IoT are now a focus for major technology vendors including the ones who have done layoffs lately.

And the seven percent of Cisco’s employee numbers is much or less in line with other vendor’s figure cuts.

While Intel and Symantec did cuts to the tune of 10 percent and 11 percent of its workforce this year. VMware announced 5 percent of its employee strength in January this year. Microsoft has laid off around 5000 employees as per industry reports this year.

The technology industry is not new to layoffs as last year of 2015 too saw many OEMs cutting their workforce.

Must read: Caution! Tech Industry Layoffs Continue in 2015

The buying patterns at customer end and CIOs has changed too which has compelling vendor companies’ to realign their skilled workforce. The traditional hardware centric jobs are paving path to SDx based employee profiles across departments of sales,pre-sales,technical, R&D to name a few. 

Most of these vendors (public listed companies) have been witnessing ‘expectedly good’ numbers since 2015. The job cuts is one of the key mantra means lesser expenses on the company’s balance sheets.

It has been little less than eight months of 2016 and major enterprise technology vendors has made a dent in their employee numbers. 

The impact of the global layoffs would in all probability rub off on most of the companies’ India operations. Maybe little less or much more.

But one thing is certain. Layoffs in technology companies is the new normal.

Here are the nine biggest layoffs (5% or more cut of its global workforce this year) by enterprise technology companies in 2016 – till date. (The companies are listed in alphabetic order).

1. Cisco

Lay-Offs: 5500

Announced: August 2016

Workforce cut: 7 percent

What: Cisco did its routine of layoffs at end of their fiscal year since 2011 reducing 7 percent of its global workforce.

Why: Cisco is undergoing restructuring to optimize their cost base in lower growth areas of our portfolio and further invest in key priority areas such as security, IoT, collaboration, next generation data center and cloud. During its earnings announcement the company said total revenue actually increased 3 percent to $48.7 billion for its fiscal year ended July 30. The company does face challenges in its core switching and routing business.

Related link: Cisco to jettison 5,500 jobs, will reinvest in cloud, IoT & more

2. FireEye

Layoffs: 400

Announced: August 2016

Workforce Cut: 11 percent

What: FireEye is set to slash up to 400 of its 3,400 jobs after “lower than expected” growth blamed on a decrease in activity from Chinese adversaries.

Why: Cybersecurity firm continues to fight the battle against cyberattacks, but the size and scope of the threat landscape have changed as per FireEye in a statement. As a result, services growth at FireEye was lower than expected and this lessened new subscription and product pull-through. Based on the firm’s financials, FireEye has cut its full-year revenue forecast to $716m-$728m from $780m-$810m.

Related link: Decline in Chinese hacking causes cybersecurity firm FireEye to slash jobs

3. HP Inc

Lay-Offs: 3000

Announced: February 2016

What: Nearly 3,000 workers will leave the company by the end of year from its original plan to spread the layoffs across three years with 1,200 workers being cut in 2016.

Why: HP Inc reported a near 12 percent drop in quarterly revenue for OND 2015 due to weak demand for PCs and printers. Revenue in the company’s personal systems business fell 13 percent in the first quarter ended Jan. 31, while it declined 17 percent in its printing division from a year earlier. The job cuts target personnel in “non-revenue generating” parts of the company, but will not affect staff of strategic growth areas like 3D printing, as per the company.

Related link:  HP Inc Workers Will See The Axe Sooner Rather Than Later

4. IBM

Lay-Offs: 5000+

Announced: March 2016 & July 2016

What: Big Blue announced two major job cuts this year – 5000 layoffs in March and undisclosed number in July this year.

Why: IBM reported its 16th straight quarter of declining revenue this April as its core software licensing and hardware business shrank. The company is focusing hard on artificial intelligence and cloud computing though offset of erosion in its core business remains. IBM CFO Martin Schroeter said that March job cuts would “rebalance the skills” of IBM’s staff as the company continues hiring in cyber security, data analytics, and cloud computing.

Related Link: IBM Starts Another Round of Job Cuts

5. Intel

Lay-Offs: 12000

Workforce Cut : 11 percent

Announced: July 2016

What: Massive job cuts announced in chip giant’s recent history to the tune of 11000 to 12000 employees accounting for 11 percent of Intel’s global employee count.

Why: In second quarter of 2016, Intel announced layoffs as restructuring to cut costs and focus on growing businesses like server processors and chips for the internet of things. Revenue from Intel’s data center group, which sells Xeon server chips, were up 5 percent from last year, to $4.0 billion. However, revenue from its client computing group, which makes chips for PCs and mobile devices, was down 3 percent to $7.3 billion, Intel said.

Related link: Intel profit slides on costs related to layoffs

6. Microsoft

Lay-Offs: 4700

Announced: May and July 2016

What: Microsoft did two major job cuts announcement till date in 2016 of 1850 and 2850 employees.

Why: The tech giant revealed in July this year that 2,850 people will lose their jobs by the middle of 2017, on top of the 1,850 cuts announced earlier this year. According to a regulatory filing, those impacted will primarily be in its phone hardware business, which has already been hit hard by layoffs, and in global sales.

Related link:  Microsoft to cut 2,850 more jobs this year

7. NetApp

Lay-Offs: 1500

Announced:  February 2016

Workforce Cut : 12 percent

What: NetApp acknowledged the job cuts during its quarterly earnings report as it will take a $60 million to $70 million charge for the layoffs and associated costs.

Why: In an SEC filing, NetApp said layoffs were A part of a restructuring effort “to streamline its core business and reduce operating expenses,” which will last till end of company’s first quarter in 2017. NetApp like other datacenter storage companies is facing much heat due to changing purchasing habits of companies who often rent their computing resources on-demand from cloud providers like Amazon and Microsoft.

Related Link: NetApp To Slash 12 Percent Of Workforce

8. Symantec

Lay-Offs: 1200

Announced: May 2016

Workforce Cut : 10 percent

What: Symantec’s five-step $400 million cost-cutting plan included 1,200 layoffs and closing a quarter of its offices. A month earlier, Symantec CEO Michael Brown stepped down.

Why: Symantec announced the cost cuts after reporting fiscal Q4 sales that missed expectations. Symantec layoffs come amid a weak revenue forecast for the security company. CFO Thomas Seifert said during an earnings call, “These changes to the organization will result in just under $100 million in savings and reduce our net head count by approximately 1,200 positions. “Most of the cuts are expected to hit the enterprise unit, which last quarter accounted for 53 percent of the company’s total $929 million in revenue.

Related Link: Symantec’s quarter: CEO exit, $400Mn cost-cuts, Blue Coat Systems buy

9. VMware

Lay-Offs: 800

Announced: January 2016

Workforce Cut: 5 percent

What: The layoffs came at a time when Dell made an announcement to acquire EMC (and VMware as part of the deal) few months ago in November 2015.

Why: VMware is transitioning from its traditional products to emerging technologies. 2016 will be a key transition year as we expect the effect of our new products to outweigh the decline in our compute products, CEO Pat Gelsinger said in an earnings conference call in January this year. The company is facing challenges in its software business as its customers increasingly use public cloud providers like Amazon Web Services and Microsoft Azure.

Related link: VMware cuts 800 jobs as it transitions from older ‘blockbuster’ compute products