Computer manufacturer Dell is preparing to lay off 6,650 of its employees, or around 5% of its total employees globally.
Reported by Bloomberg, Tuesday (7/2/2023), this layoff was known from a memo sent by Dell deputy CEO Jeff Clarke. He said Dell's previous steps to increase efficiency were insufficient as market conditions continued to decline with an uncertain future.
The steps Clarke is referring to include stopping the recruitment of new employees and limiting official travel. That's why Dell is now laying off employees to save on the company's operational costs.
The layoffs were made at a time when the PC business was declining. After experiencing a huge spike at the start of the COVID pandemic, now PC sales have fallen drastically. IDC reported a 37% drop in Dell product shipments during the year-end holiday season compared to the same period a year earlier.
Meanwhile, according to Bloomberg, 55% of Dell's revenue comes from PC sales. So the decline in PC shipments is having a huge impact on Dell.
Clarke said the layoffs were critical to Dell's long-term financial health. In addition, according to him, company reorganization can also increase efficiency and innovation.
After the layoffs are carried out, the number of Dell employees will be recorded as the lowest in the last six years, which is around 39 thousand workers. The highest record was in January 2020 where Dell had 165 thousand workers.
"We can weather the previous economic downturn and can come back stronger. We will be prepared for when the market picks up again," Clarke said in the memo.
Dell isn't the only PC company to make layoffs. Last November, HP announced plans to lay off 6,000 employees, while Lenovo also made layoffs in the US in December 2022 but the number is unknown. Tech companies such as Meta, Google, Microsoft and Amazon have also made large layoffs in recent months.