Dell to cut 5% of workforce worldwide as PC demand falls

Company with presence in Ireland since 1990 employs about 5,000 in Cork, Limerick and Dublin

Dell Technologies has become the latest multinational technology firm with a strong presence in Ireland to announce it will cut jobs.

The company says it is to eliminate about 5 per cent of roles worldwide, roughly 6,600 based on its most recent publicly stated employee numbers, as it faces plummeting demand for personal computers.

The company confirmed the news in a regulatory filing early on Monday. Dell is experiencing market conditions that “continue to erode with an uncertain future”, co-chief operating officer Jeff Clarke wrote in a memo subsequently released to The Irish Times in a statement.

In it, he said the company had already implemented a pause on external hiring, limited travel and reduced its spend on outside services but that the measures “are no longer enough. We now have to make additional decisions to prepare for the road ahead.”

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He went on to outline a number of structural changes to be undertaken and said these would necessitate the job losses.

The company has about 5,000 employees in Ireland in Limerick, Cork and Dublin and though no details were immediately available on how many staff at the Irish operation might be affected, the 5 per cent figure would suggest about 250.

The move follows similar announcements from the likes of Google, Amazon and Microsoft in recent weeks with layoffs across the sector very significantly up.

Minister for Enterprise Simon Coveney is in the United States for a series of meetings with major companies at which it is intended he will make the case that Ireland remains an attractive place for major overseas employers to do business in.

Before leaving he said: “The impact on Ireland so far of tech sector announcements isn’t anything like the impact on some other countries and other parts of the world, but it will impact on some people and the State will be there to support those people. We have a very strong economy at the moment and a very strong tech sector.

“Unlike many other countries across the European Union and across the world, in the context of the headwinds that we faced last year around increased costs, dramatic disruptions to supply chains and so on, Irish companies and multinationals here in Ireland have performed remarkably strongly. But we’re not going to be immune from the consequences of some of the global decisions that are being made in boardrooms, particularly in the US, in terms of global businesses.”

Dell shares, down almost a third in a year, fell 0.6 per cent in premarket trading amid a broader slump in US equity futures.

After a pandemic-era PC boom, the company and other hardware makers have seen cratering demand. Industry analyst IDC said preliminary data showed personal computer shipments dropped sharply in the fourth quarter of 2022.

Among major companies, Dell saw the largest decline – 37 per cent compared with the same period in 2021, according to IDC. Dell generates about 55 per cent of its revenue from PCs.

Mr Clarke told workers that previous cost-cutting measures, including a pause on hiring and limits on travel, were no longer enough. The department reorganisations, along with the job reductions, were viewed as an opportunity to drive efficiency, a company spokesperson said.

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Among the other tech sector firms to announce layoffs in recent months are several of Dell’s peers and competitors. HP, similarly exposed to the PC market, announced in November a reduction of as many as 6,000 workers.

Cisco Systems and IBM each said they would eliminate about 4,000 workers. The tech sector announced 97,171 job cuts in 2022, up 649 per cent compared with the previous year, according to consulting firm Challenger, Gray & Christmas.

After the reduction, the headcount for Round Rock, Texas-based Dell will be its lowest in at least six years – about 39,000 fewer employees than in January 2020. Only about one-third of the company employees are US-based, according to a March 2022 filing.

Dell reported a 6 per cent sales decline in the period ended October 28th and gave a revenue forecast for the current quarter that fell short of analysts’ estimates, saying customers were reducing their purchases of information technology. The company is expected to provide further information on the financial impact of the job cuts when it reports fiscal fourth-quarter results on March 2nd.

“We’ve navigated economic downturns before and we’ve emerged stronger, Mr Clarke wrote in his note to employees. “We will be ready when the market rebounds.” – Bloomberg

Emmet Malone

Emmet Malone

Emmet Malone is Work Correspondent at The Irish Times