Dell plans on laying off 6,650 workers, or roughly 5 percent of its global headcount.
“What we know is market conditions continue to erode with an uncertain future,” Jeff Clarke, Dell’s vice chairman and co-COO, wrote in a statement posted on the company’s website. “The steps we’ve taken to stay ahead of downturn impacts—which enabled several strong quarters in a row—are no longer enough. We now have to make additional decisions to prepare for the road ahead.”
Dell joins Amazon, Google, Microsoft, and other tech giants that have initiated sweeping layoffs over the past few months. All of these companies enjoyed outsized revenue and profits during the pandemic, when homebound consumers and all-remote businesses relied more than ever on cloud-based services and e-commerce; but with bubbling fears of an economic recession, those customers have now cut back on spending, forcing even the biggest of the tech giants to slice budgets and headcount.
Dell has been through rocky times before, however. Once a public company, it went private in 2013 as part of a broader pivot toward cloud computing, storage, and scaled architecture. Its leadership made some bold moves, such as swallowing up EMC in a $67 billion mega-deal, while continuing to sell PCs and other hardware.
Dell’s reliance on both cloud services and hardware puts it in a potentially challenging position vis-à-vis the current downturn. There’s a new Stratechery column that breaks down how a cyclical downturn in hardware sales has impacted a variety of companies that sell PCs, microprocessors, and various devices, including Apple and Microsoft. But for these companies (and Dell), there’s a light at the end of the proverbial tunnel: “Hardware has always been cyclical, and the implication of a downward cycle is that an upwards one will come eventually, particularly as those year-over-year comparisons become easier to beat.”
Meanwhile, the tech unemployment rate dipped to 1.5 percent in January, showing that, although the tech giants are cutting jobs, the need for technology professionals remains strong throughout the broader economy.