Hewlett-Packard is reportedly trying new tactics in order to restructure its “labor pyramid” in the face of shrinking revenues. In an effort to cut costs, HP is giving employees the option to either become a contract worker with no benefits or lose their jobs.
For the past seven years, the company has been cutting thousands of jobs as part of a $1 billion restructuring process. Many hourly employees in HP’s Enterprise Services unit were told in July that they must either become a contract employee for Adecco, a contract agency employed by HP, or lose their jobs. The deadline to make the decision came up on August 15.
Those who accepted the contract work reportedly lost all accrued paid time off, benefits and seniority. Those who did not lost their jobs without severance. A source close to the situation said many chose to lose their jobs.
The global information technology company responded to the claims, saying only a “small number” of employees were affected. “HP reached an agreement with a strategic labor partner to allow more flexibility in managing labor demands,” an HP representative told the Business Insider.
“There are a small number of employees who will move from HP and become contractors to HP’s Mobility and Workplace Services organization,” the company explained. “HP will continue to own and manage the end-client relationship and overall service responsibility.”
The Houston Business Journal also reported HP notified the Texas Workforce Commission it would be cutting 70 jobs in Houston. In these cases the employees will be given the equivalent of 60 days of pay and benefits.
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A Worker Adjustment and Retraining Notification Act letter sent to the TWC said the employees could “find a new position elsewhere within the company and/or transfer to another HP facility.”
Earlier this year, HP let 77 employees go from their Houston offices. In November 2014, the company cut 60 jobs.
HP CEO Meg Whitman has said she is dedicated to bringing profit margins up by 7% to 9%. In 2012, the company announced they would cut 25,000 jobs over the next three years in an effort to stabilize the company. In recent weeks, HP CFO Cathie Lesjak said the company would be cutting an additional 5% from its workforce beyond its overall target of 55,000 job cuts.
HP plans to split into two companies in November. HP Inc. will sell its PCs and printers and and HP Enterprise will sell servers, storage, software and network gear. The Enterprise Services unit is set to become part of HP Enterprise.