PC shipments are plunging due to a tough economy and the pandemic recovery, and that's proving to be especially painful for Dell. The company is laying off about five percent of its workforce, or roughly 6,650 employees, to cope with a "challenging global economic environment." Earlier cost reduction measures like an external hiring freeze weren't enough, according to operations chief Jeff Clarke. A market that "continues to erode" requires further action, he says.
The layoffs include organizational changes and "resets," Clarke says. This includes streamlined sales and services, as well as engineering that focuses on "priority offerings." Bloomberg notes the job cuts will bring Dell's employee count to its lowest in six years, and 39,000 below what it had at the start of the pandemic in January 2020.
Dell was one of the major beneficiaries of the pandemic as people rushed to buy PCs for remote work. Now that the boom is over, however, the firm's dependence on computers (approximately 55 percent of its revenue) is becoming a liability — particularly in an economic climate where purchasing power is dropping. Gartner and IDC both estimate that Dell's shipments plunged 16 percent in 2022 compared to the year before, and 37 percent in the last quarter. That's one of the worst declines among major PC vendors, and only Acer fared worse in the fourth quarter with a 41 percent drop.
This is just the latest in a series of layoffs this year, and it comes just months after key rival HP said it would lay off as many as 6,000 workers. Few tech companies have avoided taking a hit in recent months, and even relatively successful brands like Apple are still grappling with falling sales. Simply speaking, Dell might only recover once the industry as a whole has turned a corner.