- January 22, 2016, 3:36 P.M. ET
EMC, VMware, IBM, etc.: Here Come 333,000 Layoffs in Tech, Opines Global Equities
By Tiernan RayGlobal Equities Research’s Trip Chowdhry, a one-man shop of investment observations, today opines that layoffs in the mainstream of tech companies are primed to become much worse than expected: He predicts there will be at least 333,000 layoffs in the next twelve months, in part because of developments such as cloud computing.
Chowdhry takes as his cue an article this morning by Barb Darrow over at Fortune, which claims VMware (VMW) is going to lay off 900 people, or 5% of its workforce, as part of its buyout by Dell along with VMware majority holder EMC (EMC). Darrow cites multiple unnamed sources regarding the layoffs.
That’s nothing, says Chowdhry, asserting “the above news item is very likely accurate … but over the 2016, we could see more layoffs.”
Chowdhry’s philosophical justification for such a dour view is in large part that the shift to cloud computing eliminates a lot of IT talent that has been classically devoted to “back-end” operations of IT.
He opines that 70% of the work done in IT is for such back-end things, versus the 30% that is focused on, presumably, more rewarding “domain-specific” tasks.
Chowdhry thinks now with the cloud, because infrastructure is outsourced to Amazon.com (AMZN) and other Web services, the equation flips, and the talent that’s in demand will be domain-are experts, while traditional back-end IT staff goes away. As he summarizes,
70% of the current work which requires Back Expertise, Products and Services is going to get reduced to 30%, and will result in massive 333,000 layoffs in the tech sector Sadly, the new jobs in Functional/Customer Domain will not be immediately filled, as those skills are scarce and the educational system is behind the curve
Chowdhry offers the following tally of what he thinks layoffs will look like:
- EMC: Total Employees: 70,000: Between 15% to 20% layoffs = between 10,000 and 14,000
- VMWare: Total Employees:17,000: Between 10% and 15% layoffs = between 1,700 and 2,500
- HP Enterprise (HPE): Total Employees 240,000: about 30% layoffs = about 72,000
- HP Inc (HPQ): Total Employees 287,000: about 30% layoffs = about 86,000
- IBM (IBM): Total Employees 379,000: about 25% layoffs = about 95,000
- Cisco (CSCO): Total Employees 72,000: about 20% layoffs = about 14,000
- Juniper (JNPR): Total Employees 8,800: about 15% layoffs = about 1,300
- Oracle (ORCL): Total Employees 132,000: about 20% layoffs = about 26,000
- Microsoft (MSFT): Total Employees 118,000: about 15% layoffs = about 18,000 (Microsoft is letting go about 200 to 250 people every week, and none of these are ever announced)
- Network Appliance (NTAP): Total Employees: 12,800: about 15% layoffs= about 1,800
- Symantec (SYMC): Total Employees: 19,000: about 15% layoffs = about 2,800
- F5 Networks (FFIV):Total Employees: 4,500: about 10% layoffs = about 450
- Yahoo (YHOO): Total Employees 12,500: about 30% layoffs = about 3,500
- Yelp (YELP): Total Employees 3,671: about 30% layoffs = about 1,000
I would note that unaddressed in Chowdhry’s missive is what sort of hiring might replace such layoffs, if they were to occur. In some cases, companies have replaced some layoffs with new hires, as they seek to emphasize new skill areas at the expense of others.