HPE UK preps the redundancy ride as Chrimbo looms

Not compulsory... yet! On track to shift 60% of service staff to 'low-cost countries'

Cost-cutting at Hewlett Packard Enterprise's CSC-bound services business looks set to continue right up to the point it is sold in the spring, leaked documents have indicated.

In a note to his staff this week, Maurice Mattholie, HPE UK and Ireland veep for IT Outsourcing – which part of the outgoing Enterprise Services (ES) division – confirmed it was again going to embark on its umpteenth phase of the Workforce Management programme, aka redundancies.

“Hewlett Packard Enterprise needs to create a more efficient and accountable organisation to ensure a healthy long term sustainable business, with a market competitive cost structure, that will help the company transition to the new style of business,” Mattholie told workers in UK and Ireland.

The collective consultation with the UK Works Council and trade union reps began in late November. Mattholie said HPE was trying to use “redeployment and voluntary exits” where possible rather than making purely compulsory redundancies.

He added: “It is expected that up to 35 positions within UK&I ITO will be impacted through WFM in Q1. Whilst I appreciate that this announcement may cause concern, I am committed to providing regular updates to ensure that everyone is kept informed.”

The $8.5bn spin merger between ES and CSC is due to complete in March, creating a $20bn + turnover organisation. For the transaction, HPE has created a wholly owned vehicle, Everett SpinCo Inc.

The main $8.5bn value of the deal is made up of $4.5bn in stock exchange – resulting in HPE shareholders owning 50 per cent of the new company – a $1.5bn cash dividend, and $2.5bn in debt and other liabilities; the $2.5bn is made up of $1.9bn of HPE debt and $0.6bn of net pension liabilities.

El Reg recently revealed that HPE is outsourcing its internal IT function to CSC.

The ES division was hit hard after the big multi-year outsourcing contracts starting drying up, and it bore the brunt of HP and then HPE’s cost-cutting measures. In HPE’s most recent quarter, Q4 ended October, ES sales declined but operating profit grew to the highest level since 2009.

CFO Tim Stonesifer said on a conference call with analysts that HPE had ended the quarter with 51 per cent of its headcount in “lower cost locations” - the aim is to get to 60 per cent, he added.

In the UK, HPE is consolidating delivery centres to just two in the north-east of England and in Scotland. Rival IBM wants to have 80 per cent of its services workforce in lower cost countries by the end of 2018. ®

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