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Dell downsizes workforce in broader cost reduction strategy

Written by Tue 26 Mar 2024

Image Credit: Reuters

Dell Technologies has downsized its workforce as part of a broader cost-cutting strategy, reducing external hiring and reorganising employees.

Reuters reported the layoffs arrived after demand for its computers slowed for almost two years, contributing to an 11% drop in revenue in Q4 earnings posted last month. As of 2 February, Dell had almost 120,000 employees, down from 126,000 in 2023.

On Monday, Dell said it expects its client solutions group (CSG) to grow for the entire year. This segment’s revenue fell to 12% in Q4

“We have just started to touch the artificial intelligence (AI) opportunities ahead of us, and we believe Dell is uniquely positioned with our broad portfolio to help customers build GenAI solutions that meet performance, cost, and security requirements,” said Jeff Clarke, Vice Chairman and CEO at Dell Technologies in its Q4 financial results.

Dell warned about difficulties in the future, however, the company anticipate an improvement in demand and a more competitive pricing environment in fiscal year 2025.

The company expects increased input costs and noted a probable ongoing decrease in net revenue for other businesses due to changes in its commercial relationship with VMware. Dell repurchased shares associated with its stake in VMware, which enabled it to re-enter the market in 2018.

Last year, Chipmaker Broadcom completed its acquisition of VMware, valued at £54.4 billion ($69 billion).

In response to economic uncertainties and declining demand for personal computers, Dell reduced its workforce by 6,650 jobs last year.

Tech Companies Grapple with Employee Layoffs

In February, Cisco said it was planning layoffs as part of a restructuring of its business. The decision was set to impact thousands of employees. 

Cisco has 84,900 employees as of fiscal 2023, according to the company website. One source said Cisco is yet to finalise the total number of employees impacted by the layoffs.

In January, the CEO of Google and Alphabet, Sundar Pichai, warned staff more job cuts will come in addition to recent layoffs. In a staff memo, Pichai stated certain roles may be affected as company divisions undergo ongoing changes.

In March 2023, Meta, the parent company of Facebook, Instagram, and WhatsApp, cut more than 20,000 jobs.

In 2022, Twitter employees prepared themselves for substantial layoffs. Around 2,000 staff, or 25% of the workforce, were expected to be dismissed as part of an extensive overhaul.

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Written by Tue 26 Mar 2024

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