The merger of two of the Republic's largest technology employers, Hewlett-Packard and Compaq Computer, could result in hundreds of Irish job losses as the new group removes overlapping positions to reduce costs.

Both firms signalled yesterday they would seek around $2.5 billion (€2.75 billion) in cost savings and a further 15,000 redundancies worldwide. The US-based multinationals employ almost 4,500 people in the Republic and Northern Ireland, and have already announced thousands of job cuts this year which have not yet affected their Irish operations.

Analysts warned that both groups' European operations which employ approximately 44,000 people, would not be immune to further job cuts.

Hewlett Packard and Compaq have both based technology and services hubs which cater for the Europe, Middle East and African regions in the Republic. These operate financial, sales, marketing and administrative centres in the Republic, which may be vulnerable.

Hewlett-Packard employs around 120 people at its international bank here, while Compaq employs about 120 in Dublin-based finance functions. Sales and marketing functions could also prove vulnerable.

However, the main domestic operations of both firms may prove more resilient to downsizing. The bulk of Hewlett-Packard's employees in the Republic, approximately 1,750 people, are employed in lower value technology positions at its inkjet manufacturing operation in Leixlip, Co Kildare.

This contrasts with Compaq, which has refocused its Irish businesses on higher value operations. "There is not a great deal of overlap in the two companies' operations here in Ireland," said Mr Barry Dixon, technology analyst with Davy Stockbrokers. "So while at first glance it looks negative, it's very difficult to say where cuts would be made."

IDA Ireland does not envisage a major impact on jobs because of the limited number of overlapping positions in the companies' Irish operations. An IDA spokesman said both firms had very recently signalled the strategic importance of their operations to the Government. The 15,000 job cuts would be phased over a 12-24 month period, according to an internal e-mail sent to Compaq staff yesterday, which has been seen by The Irish Times.

In the e-mail, Compaq chief executive, Mr Michael Capellas, says one of the clear advantages of the merger is the financial leverage it provides. "Those reductions will be phased in during the 12 to 24 months after the deal closes, through targeted job reductions and attrition. Both companies will be affected."

Other likely losers from the merger would be vendors and resellers which market equipment and services to both of the merging firms, and perhaps some suppliers.

Mr Ray Breen, sales director of Mentec International, a reseller of both Hewlett and Compaq equipment and services, said the merged organisation would probably cut the number of resellers in the Irish market.

Although the combined group should enjoy greater cost efficiencies, these will probably not benefit Irish consumers. In contrast, the merger will further reduce competition in the European computer hardware marketplace and result in fewer product lines and less choice for consumers.

However, the combined company, which will retain the name Hewlett-Packard, would become a major force in the European market, accounting for about a quarter of all shipments sold in the first half of 2001.