HP could axe 280 local jobs

By Chris Jenkins and Andrew Colley 21jul05

UP to 280 Australian jobs could go, following Hewlett-Packard's announcement that it would cut 10 per cent of its global workforce, resulting in the loss of 14,500 jobs.

The HP job cuts are part of a program designed to simplify its structure, reduce costs and place greater focus on its customers. The cuts will save about $US1.9 billion ($2.53 billion) annually, the company said.

HP has so far declined to detail exactly how the announced cuts would affect the local operation, but confirmed that it had around 2800 Australian employees at present.

A 10 per cent staff cut could potentially result in the loss of around 280 jobs, but an HP spokesman said the 10 per cent headcount cut would not automatically be applied in Australia.

The cuts would take place over the next six quarters.

"The majority of staff reductions will come in support functions, such as information technology, human resources and finance," the company said. "The remainder will be made inside business units, in areas where work can be reduced by improving processes and re-prioritising existing tasks.

"Headcount-reduction plans will vary by country, based on local legal requirements and consultation with works councils and employee representatives."

IDC Australia's Asia Pacific services buttociate director Phil Hbuttey said the cost-cutting program could see more HP functions moved offshore.

"The heat's on in places like HR," Mr Hbuttey said. "Australia's has a higher (labour) cost than average markets and there may be a shift to move some of those costs towards the lower cost locations across Asia -- not just India.

"HP headquarters are actually in Singapore, which is by and large a lower cost operation than here."

One industry source who asked not to be named told The Australian: "The local HP people wouldn't really know what the impact would be on them at present".

In large US companies like HP, any "fat" in the organisation tended to be in head office, with regional operations less open to rationalisation, he said. "My experience is that the ripple effect out to the regions is much smaller."

Gartner analyst Rolf Jester said that apart from morale problems that may become evident in the short term, the decision was a "positive step forward" for HP.

As long as the cuts remained at arm's length from customer-facing divisions of the company, HP's clients were unlikely to feel any impact from the change.

"We're not seeing any cuts that we know about in its customer-facing activity such as service delivery or sales, for instance, and the other things that will achieve what their prospective customers are after, so that's good news," Mr Jester said.