Axe swings for staff as HP and EDS merge

Axe swings for staff as HP and EDS merge

After initially playing down the impact of its planned merger with EDS, HP now says job losses in Australia and New Zealand will be “in line” with global numbers — and that would leave up to 250 Kiwi employees facing the chop.

Hewlett-Packard New Zealand’s communications manager, Annette Gault, says HP and EDS have entered into consultation with a number of employees within EDS New Zealand.

“The impact in Australia and New Zealand is expected to be in line with the announcement. However, we are unable to confirm exact numbers,” Gault says.

Computerworld understands local EDS staff affected by the consolidation were informed of their fates last week.

In September, the company announced its plan to shed 24,600 employees globally, approximately 7.5% of the combined HP-EDS workforce, over the course of a three-year phased programme.

The combined businesses have around 3,300 employees in New Zealand, meaning just under 250 could be affected.

In September, HP’s enterprise marketing manager in New Zealand, Jeff Healey, told Computerworld the integration plan was still in its early stages, but the local operations of HP and EDS were “quite complementary”.

“There’s not a lot of overlap in customers,” he said.

Healey said HP CEO Mark Hurd’s blueprint indicated most of the global redundancies would come from EDS and half of those from the US in areas such as shared services.

“Given there is not a lot of that type of resource here in New Zealand, I wouldn’t apply a straight percentage to the local numbers,” he said.

“We’ll be focusing on delivery to customers.”

Gault says operational integration is still in progress in New Zealand and there is a possibility that further areas of overlap or organisational realignment may impact on employees.

EDS will provide affected employees with severance packages, counselling and job-placement services, she says.

“We will continue to resource against growth and wherever possible will redeploy and reskill the affected individuals to meet our growth requirements.”

The lay-offs come as part of an effort to streamline the company, following HP’s US$13.9 billion (NZ$20.9 billion) acquisition of EDS, a company that is traditionally strong in the local market.

IDC senior analyst Ullrich Loeffler told Computerworld in September that contractors could be the first target of the integration. Then overheads would be looked at, specifically duplications caused by the buyout in areas such as accounting, administration, marketing and management.

He said in core IT capabilities the effects are harder to predict.

“One of the key challenges for EDS is profitability,” Loeffler says. “HP is a lot more profitable. It makes sense to look for efficiencies and synergies to increase profitability.”

Asked if EDS could be expected to bear the brunt of the reduction locally, Loeffler said that proportionally in New Zealand that was where the biggest headcount is.

The restructuring programme is expected to save HP about US$1.8 billion each year, HP CEO Mark Hurd said in September. In Australia, media reports indicate up to 460 staff could face the axe.

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