Dell Technologies to Lay Off 5% of Workforce Citing Eroding Market

Dell Technologies has begun its new fiscal year by announcing that it will lay off 5% of its workforce. Employees learned of the looming layoffs on Monday in an announcement posted by co-COO Jeff Clarke.

Clarke’s announcement to Dell’s employees didn’t specify the extent of the layoffs. But Dell noted the 5% figure in an 8-K filing with the Securities and Exchange Commission (SEC). Dell had 133,000 employees in 2022, according to Statista, suggesting that Dell will reduce layoff 6,650 people.

According to Clark, market conditions continue to “erode” with an uncertain timeframe for when they will improve. During its last earnings report in November, Dell had warned of headwinds. In Monday’s employee message, Clarke said Dell has already made significant spending cuts. Among them were a hiring freeze, reduced travel and cutting the use of outside services. But that’s no longer enough, he said.

“What we know is market conditions continue to erode with an uncertain future,” Clarke said. “In the coming days and weeks, you’ll begin to see a series of changes — some resets — across the organization to better structure us for the future, to better collaborate, reduce complexity, increase speed and to accelerate innovation.”

Areas Impacted

Clarke indicated the company areas impacted would include global sales, with plans to consolidate its Dell Technologies Select (DTS) and regional sales teams. The global sales reduction will provide “additional consistency in how we work with customers and partners worldwide, collaborate and share best practices faster, all of which help us grow,” Clarke said.

Dell also plans to integrate its Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG) support services. “All this adds up to our ability to develop more integrated solutions more quickly, Clarke noted. Also, according to Clarke’s memo, Dell has shifted its ISG engineering teams and resources to focus on its highest-priority offerings.

The announcement comes on the first day of Dell’s 2024 fiscal year. Dell isn’t scheduled to report earnings for its fiscal fourth quarter, which ended Feb. 3, until March 2. But forecasts show that while PC demand industrywide has fallen sharply, Dell took a particularly significant hit.

During the fourth calendar, the peak period for PC sales, Gartner reported that global shipments industry-wide fell 28.5% year-over-year. But Dell fared worse, with its year-over-year shipments falling 37%, according to Gartner. Lenovo, the No. 1 provider based on global shipments, experienced a 28.6% decline, while HP’s shipments fell by 29.1%. But Lenovo and HP’s shares remained essentially flat, while Dell gave up over two points of share.

Personal systems at HP accounted for 70% of its revenues during its FY22 for the period ending Oct. 31, 2022. PCs generate roughly 55% of Dell’s revenue, according to Bloomberg. HP announced plans to reduce its workforce by 6,000 back in November, though it is staging the reductions through 2025.