Business NEWS
What are Dell’s new Cost Savings Measures?
By Amarendra Bhushan for CEOWORLD Magazine Updated:November 5, 2008
Get CEOWORLD Magazine digital monthly version. special- Top Capital Cities for a business Traveler, # Interview with Minister of Tourism of Greece. 1 Issues Subscription= $1 Only, 10 Issues Subscription= $5 Only. Grab your copy now!!!!Dell Inc. the world’s second largest producer of desktops and notebooks, will offer nearly all of its employees up to a week of unpaid leave as part of an effort to cut costs this quarter.
The giant PC vendor, based in Round Rock, Texas, hopes to save an undisclosed sum via employee leaves and a handful of more conventional measures, including:
• A hiring freeze.
• Voluntary severance packages.
• Reduced travel expenditures.
• Capital project delays.
• Elimination of some nonstaff positions filled by temporary workers and independent contractors.
“We’re taking action in this fourth quarter to reduce costs and improve Dell’s long-term competitiveness in a time of economic uncertainty,” said David Frink, company spokesman.
Dell informed employees of its cost-cutting measures in an e-mail from chief executive Michael Dell.
The note explained that although the leave program is voluntary, the company may resort to layoffs if it cannot save as much as hoped through this round of cutbacks.
Investors have long pressured Dell to cut costs, and the company has responded with several big moves. Over the last year, Dell has reduced its global workforce by 10 percent and, according to several reports, looked to sell many of its factories around the globe.
In an internal blog posting Nov. 3, CEO Michael Dell told employees that the company wants to save additional dollars in the fourth quarter of 2008 as the problems with the global economy continue and the demand for Dell’s desktops, notebooks, servers and other IT equipment slows down.
Since Michael Dell returned to the CEO position in 2006, he has looked to reinvigorate his namesake company as it faces increasing pressure not only from Hewlett-Packard but from a number of other PC vendors, such as Acer, which has seen its sales of notebooks skyrocket in the last two years.
The unpaid leave will be strictly voluntary, Dell’s memo stated, but it also warned the company may resort to layoffs if this round of cutbacks doesn’t reduce operating expenses as hoped. The company didn’t say how many employees would need to take leave time to consider the program a success.
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