SAN FRANCISCO (AFP) — US technology giant Hewlett-Packard (HP) said it will cut 24,600 jobs worldwide over the next three years as part of its integration with computer services firm Electronic Data Systems.
World leading computer maker HP bought Texas-based business services outsourcing titan EDS in August as part of a 13.9 billion dollar deal that aimed to create a global powerhouse in computer services to compete against IBM.
The workforce reduction aims to "streamline the combined company's services businesses," and once complete is expected to "result in annual cost savings of approximately 1.8 billion dollars," HP said in a statement Monday.
The job cuts are expected to allow HP "to restructure the EDS business group to streamline costs, invest in growth and drive shareholder value."
HP says merging resources with EDS is part of an ongoing evolution from a computer hardware company to a firm that combines hardware, software and services.
The three-pronged offering is intended to capitalize on market trends including "cloud computing" and virtualization.
"HP has a strong track record of making acquisitions and integrating them to capture leading market positions" said HP chief executive Mark Hurd.
"HP now has the broadest technology capabilities in the market to meet customer needs today and in the future."
About 7.5 percent of the combined workforce of 320,000 employees will be affected, with about half of the cuts taking place in the United States, HP said.
Layoffs will be weighed toward EDS, which reported having 142,000 employees as of August.
HP said it is eliminating "redundant" positions in departments such as accounting, human resources, and legal, and plans to actually hire about 12,000 engineers in the coming three years.
In May, HP inked a deal to buy EDS for 25 dollars per share. After approval by shareholders as well as US and foreign regulators, the acquisition was finalized last month.
HP has annual revenues of more than 38 billion dollars, and as of August reported having 178,000 employees. It operates in more than 80 countries.
Northern California-based HP is the world's largest IT company, with massive data centers and experience in business computing hardware that analysts said would mesh well with the expertise EDS has in outsourcing technical services for companies.
The acquisition more than doubles HP's outsourcing services business, which will be aggressively marketed particularly in Europe and the Americas, company officials have said.
HP stock was down for the day Monday but climbed nearly a percent to 45.70 in afterhours trading that followed the layoff announcement.
EDS says on its website that it founded the information technology outsourcing industry in 1962 and is now a multibillion-dollar company handling services for banks, hospitals, shops, energy producers and other firms.
Services EDS handles range from call-in centers and financial transaction processing to "desktop outsourcing" in which EDS provides firms with employee computers and refreshes models every few years.
At the time the deal was announced, analysts said HP was expected to consolidate the outsourcing firm's estimated 180 data service centers worldwide.
EDS was founded by Ross Perot, who became a billionaire and US presidential candidate, by paying an incorporation fee of 1,000 dollars and buying unused computer time at an insurance company to process data for other firms, according to a company history.
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