Both HPE and IBM are undergoing layoffs to salvage their bottom lines as the financial impact of the coronavirus pandemic takes shape.
In in an earnings call for its second quarter ending 30 April 2020, HPE chief exec Antonio Neri that customer uncertainty has had a "significant impact" on revenues, with total turnover declining 15 per cent year-on-year to $6bn.
"We have taken a deliberate set of actions to protect our financial foundation, become a more agile organisation and align our sources to critical core businesses in areas of growth that accelerate our edge-to-cloud platform-as-a-service strategy," he told analysts on the call, transcribed by Seeking Alpha.
"We have taken some immediate steps to reduce operating expenses that will protect our financial profile."
These measures include slashed salaries for all staff, effective from 1 July to 31 October. Neri and his executive team will take a pay cut of between 20 to 25 per cent to their base salary with the amount of reduction to salaries then varying by level, he added.
Those employees in countries where pay reductions are not permitted will be instructed to take unpaid leave. Salary increases and external hiring will be put on hold, he added. HPE's board of directors will each see their $100,000 a year retainers cut by a quarter.
Neri also announced the storage vendor's "cost optimisation and prioritisation plan" during the call, which obliquely refers to "workforce realignment" and is expected to be implemented through its fiscal 2022.
"This plan will help us focus our investments and realign our workforce to areas of growth that will accelerate our strategy," he stated.
"Some of the measures in the plan include continuing to streamline our product portfolio, implement new digital customer engagement models and optimising a workplace site strategy and experiences.
"As a result of the changes to the company's workforce, real estate model and for the business process improvements, we estimate gross savings of at least $1 billion and annualized net run rate savings of at least $800 million by fiscal 2022 year-end."
He clarified to Bloomberg that there will be job losses, but the number has yet to be decided.
"The number of employees who may lose their jobs under the cost-cutting plan hasn't been determined," he told the outlet.
"The company will spend the next few months working out the details and evaluating how much it can save in other areas."
Neri anticipates spending up to $1.3bn on the cost savings plan over the next three years.
HPE saw revenues tumble in all its segments, with its Compute and High Performance Compute seeing the biggest year-on-year declines of 19 and 18 per cent respectively.
Revenue slumps were attributed to supply chain disruption leading to $1.5bn in order backlog across its portfolio.
Meanwhile, IBM is axing an unspecified number of jobs - thought to be in the thousands - as a result of the coronavirus pandemic, stating that it needs to be more agile. Employees in five US states have already been made redundant.
"IBM's work in a highly competitive marketplace requires flexibility to constantly add high-value skills to our workforce. While we always consider the current environment, IBM's workforce decisions are in the interest of the long-term health of our business," the vendor said in a statement.
The job cuts are the first under new CEO Arvind Krishna, and come a month after it reported another quarter of decline for its first quarter. Krishna previously called for a "maniacal focus" on hybrid cloud and AI from staff.
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