Dell looks to employees to cut costs, asks them to go on unpaid leave
05 November 2008
Under severe pressure to reduce expenses amongst declining sales, computer maker Dell has ben resorting to a host of cost-cutting measures in recent months. From reducing workforce to selling off certain assets, CEO and Chairman Michael Dell has tried every trick in the book to turn things around. Now, he's turning to his workers for help. (See: Dell looking to sell off factories to cut costs and Dell reports earnings drop in spite of increased sales; blames self-inflicted price cuts)
In a memo on Monday, Dell asked employees throughout the company to consider taking off as many as five days without pay over the next three months. In addition, he said, the company would institute a hiring freeze, scale back some projects, offer voluntary severance packages and cut many of its contract workers.
A subtle threat accompanied the message. If those moves don't eliminate enough expenses, the memeo added, the company might have to consider further layoffs in addition to the earlier plan of 8,900 job cuts, which is nearing completion.
In a follow-up to his earlier communication, Dell yesterday said he expects further consolidation in the technology industry, and encouraged companies to ride out financial turbulence by focusing on hard returns, rethinking businesses and investing.
"Being stunned into inaction is exactly the wrong thing to do right now," he told a conference in San Francisco, adding that the company is investing in so-called cloud computing to deliver services over the Web.
At the same time, Dell aims to cut operating expenses in its fourth quarter, said company spokesman Jess Blackburn. "The intent is to better position Dell for long-term competitiveness," he said.
Dell, the world's second-biggest computer maker behind Hewlett-Packard Co, has seen soft global demand for personal computers because of the economic downturn. The company reported a steep dip in second-quarter profit in August and said it would sharpen its focus on increasing market share in emerging markets such as India.
The Austin, Texas-based company said in August it cut 8,500 jobs out of a planned 8,900 headcount reduction to adjust its business for sluggish global demand. Dell announced earlier this year it plans to reach annual savings of $3 billion in three years.