Hewlett-Packard to cut 5,700 European jobs in next two years

EUROPEAN CORPORATE gloom deepened yesterday as Hewlett-Packard announced plans to cut 5,700 jobs across the region over the next two years in response to worsening market conditions.

The redundancies come on top of the 9,330 cuts the computer company had already planned for the Europe, Middle East and Africa (EMEA) region as part of integrating the operations of EDS, which it acquired last year. They are the latest indication that the European technology market is still far from a recovery.

A number of other European technology companies have recently also cut headcount, including Logica, Sage and Aveva.

Sales of software at the region’s bellwether companies SAP and Dassault Systemes were down 30 per cent in the recent quarter.

“The fundamentals are still getting worse and our concern is that there is more bloodletting to come, especially in IT services,” said Rajeev Bahl, analyst at Piper Jaffray. “The Americans saw it first, last autumn. Europe is four to six months behind.”

HP said last week it was planning to reduce group headcount by a further 2 per cent, or about 6,400 jobs, on top of a 26,000 company-wide redundancy programme announced last year. However, it became apparent yesterday that in this new round, the axe would fall heaviest in Europe, where HP has about 80,000 staff.

A spokesman for HP Ireland said there was no indication yet of what the likely impact on jobs would be in the Republic.

“At this stage it is too early to comment on the potential impact of the EMEA restructuring plan on HP’s operations here in Ireland,” he said. “The breakdown of affected positions in businesses and functions on a country level will be evaluated during the coming weeks.”

The Irish operation has recruited staff for 300 of the 500 jobs announced in March with the creation of a global help desk at its Leixlip Technology Campus. HP is one of Ireland’s largest technology employers with over 4,000 staff at offices in Dublin, Kildare, Galway and Belfast.

The cuts are to come across all divisions, which include sales of computer hardware and printers, as well as IT consulting services.

“These kinds of cuts are not happening in other regions,” HP said. “The economic situation in Europe is a bit delayed.”

Last week, Mark Hurd, chief executive, said the company had seen improvements in the US and Chinese consumer markets, while sales in the EMEA region fell by 11 per cent.

The company is also planning to relocate production of its enterprise, storage and equipment from two factories in Scotland and Germany to a partner company in the Czech Republic in 2010. HP’s sales of servers and storage equipment fell by 28 per cent in the second quarter, making it the company’s worst-performing division.