Dive Brief:
- HP expects to reduce its global headcount by 4,000 to 6,000 employees by the end of fiscal year 2028, the technology company said Tuesday.
- The planned layoff is part of a company-wide initiative “to drive customer satisfaction, product innovation, and productivity through artificial intelligence adoption and enablement,” the Palo Alto, California-based supplier of personal computers and printers said in a press release.
- The workforce reduction will result in “gross run rate savings” of about $1 billion by the end of fiscal 2028, according to the release. The company is estimating about $650 million in labor and non-labor costs related to restructuring and other charges, including about $250 million in fiscal 2026.
Dive Insight:
HP is one of several major tech companies that have announced large job cuts this year as AI investments ramp up.
Forty-two percent of finance chiefs view headcount reduction as the clearest way to generate a return on investment from AI spending, according to a recent study by Economist Impact, a research organization operated by the Economist Group, a global media company. Yet roughly the same proportion (43%) disagree, arguing that headcount reduction is a narrow and potentially short-sighted metric.
U.S. employers overall announced 153,074 job cuts in October, a 175% increase compared with the year-earlier period, in part due to AI-driven automation, outplacement firm Challenger, Gray & Christmas said in a report this month.
Among private sector employers, cost-cutting was the top reason cited for job reductions in October, leading to 50,437 announced layoffs. AI was second, with 31,039 job cuts. The technology was cited for 48,414 job cuts during the first 10 months of this year.
HP’s latest layoff announcement came as the company released its earnings results for its fiscal 2025 fourth quarter ended Oct. 31. The company posted $55.3 billion in total revenues for the quarter, up 3.2% from the prior-year period.
“Our Q4 and FY 2025 results reflect strong execution against challenging trade dynamics with continued sequential improvement as promised in the back half of the year,” HP CFO Karen Parkhill said during a Tuesday earnings call.
AI-enabled PCs doubled revenue year-over-year, according to the finance chief. Going forward, the tech giant sees “a significant opportunity ahead to embed AI into almost all that we do to improve productivity, accelerate innovation and improve customer experiences,” Parkhill said.
Meanwhile, the company is considering “aggressive actions” such as jacking up prices as it grapples with escalating inflationary pressures, HP CEO Enrique Lores said during the call.
“Memory costs are currently 15% to 18% of the cost of a typical PC, and while an increase was expected, its rate has accelerated in the last few weeks,” he said.
