Hewlett-Packard to make selective workforce cuts at EDS, analysts say

18 August 2008:

EDS has deferred all public discussion on the future of the company until the sale actually closes. But industry experts and analysts are offering some predictions on the likely fallout when the deal does close, which could be as soon as Tuesday, when H-P announces quarterly financial results.

For EDS employees, there's bad news and good news. The bad news is almost certain job cuts at EDS, which currently employs about 140,000 people worldwide. The good news, however, is that HP's cuts are likely to be selective, in order to preserve the technical and sales skills that made EDS an attractive buyout target in the first place.

"Clearly, they're going to go through another significant head-count reduction," said Peter Bendor-Samuel, founder of Everest Group, a Dallas outsourcing consulting firm.

Sanford Bernstein analyst Rod Bourgeois said that large corporate buyouts generally result in the company being bought losing about 8 to 10 percent of its workforce. "That's kind of a rough rule of thumb," he said.

If HP were to trim EDS's payroll accordingly, that would mean as many as 14,000 layoffs. But EDS has already been trimming workers and shifting projects to low-cost locations outside the U.S., Mr. Bourgeois noted.