HPE Cost-Savings Plan Sees Office Closures, Staff Cuts

HP Enterprise has joined other tech companies in forecasting a long-term shift toward working remotely, saying it expects more than half of its staff to stay away permanently.

“My expectation is at least 50 percent of our employees will never come back to an office,” said HPE chief executive Antonio Neri during an earnings call last week.

His remarks are in line with the expectations of Facebook, which said last week it expects half of its 48,000 staff to work remotely over the next five to 10 years.

Facebook last week said it would institute a permanent remote working option, but said it would cut pay to match the cost of living in the area where the employee is located.

Image credit: HPE

Office closures

Canada-based Shopify also said last week that it plans to allow staff to work from home long-term.

HPE said it plans to close or merge some offices following a sharp revenue drop for the quarter to 30 April.

The company’s business has been hard hit by the coronavirus pandemic, which has affected its supply chain, making it difficult to fulfil orders for enterprise hardware such as servers, storage and networking equipment.

Lockdown orders have also affected HPE’s ability to deliver and install systems on customers’ premises.

As a result, the company said it is looking to move away from hardware sales and toward cloud-based software.

“I think our strategy to deliver a cloud experience from the edge to the cloud is more relevant than ever,” Neri said during the call.

Cost-cutting

The company is also bringing in cost-cutting measures, including job cuts across nearly all areas of the business and pay cuts for top executives, targeting gross savings of at least $1bn by 2022.

Beginning on 1 July, and for the remainder of fiscal 2020, Neri and officers at the executive vice president level will see their pay cut by 25 percent, while the board of directors’ $100,000 (£82,000) cash retainer will also be cut by one-quarter.

HPE’s revenues for the quarter were down 16 percent, with earnings per share at $0.22, down from $0.42 a year ago.

The company’s shares fell nearly 6 percent in extended trading following the announcement, and are down about 35 percent this year.

Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

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