Since we first published our report about impending mass layoffs at HP, we've heard from a bunch of HP employees offering us more details.
They paint a scary picture, particularly about the beleaguered HP Enterprise Services group.
In 2008, HP spent $13.9 billion to buy EDS, folding in HP's smaller services arm and renaming it HP Enterprise Services (HP ES). This group handles outsourcing contracts for HP.
- Layoffs have been going on for years. HP originally said it would shed 25,000 workers and that it was done with this in October, according to documents filed with the SEC.
- Perhaps as many as 5,000 more people have been laid off since March, said one former employee who was let go in April.
- In March, HP employees began hearing that HP was planning on laying off 30,000 people across all units, with ES hardest-hit.
- Employees have been steadily leaving, too. This could be hurting some of HP's contracts, like its Navy Marine Corps Intranet/Next Generation Enterprise Network. The Navy renewed its contract with HP in 2010 for $3.3 billion in a five-year deal, but the Navy would rather end the relationship, Wired reported at the time. "Over the past 10 months, over 70 employees have left the NMCI/NGEN contract. All for higher-paying jobs, better jobs," said one former employee.
- The HP ES team never felt integrated with the rest of HP. When HP bought EDS, it just about doubled the size of HP. EDS had 139,500 workers and HP had 172,000.
- The cost overruns that Meg Whitman complained about in March were caused by "the HP side," an ES employee said. HP took over the management of EDS's IT tools, like its telephone system. They added staff to manage the tools and charged the extra staff back to what used to be EDS. "Is it any wonder that HP ES's costs rose 10% last fiscal year?"
- A good chunk of the next round of layoffs could be coming from a part of HP ES known as the Business Process Outsourcing unit, sources at HP ES believe. HP has been talking about selling the unit or shutting it down, our sources say. This unit lets big companies hire HP to do tasks such as customer support, human resources, payroll, and accounting. One employee said that BPO had about 25,000 employees when HP bought EDS and is about half that size now.
- ES had a string of leaders—none of them with a clue, employees complain. "HP ES was never managed properly. Management never had proper direction from the top down. Almost every 6-8 months, we would get an email about leadership changes," one employee told us.
John Visentin was put in charge of ES last year. "He's been so invisible it's just ridiculous," our source told us. "Meg Whitman came out and said HP ES was HP's biggest problem ... that was in March. He made no statement at all … no emails, nothing."
Last quarter, ES reported $8.6 billion in revenue. At the time, it was HP's second largest unit. (The PC unit was a little bigger.) HP has since reorganized.
