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IBM circles as HP-EDS layoffs hit

Amid speculation that up to 250 local staff could lose their jobs as HP merges with IT services giant EDS, rival IBM is eyeing its opportunities.

"Any merger or acquisition is disruptive," says IBM Australia-New Zealand CFO Sara Watts told NBR during October. "A number of HP and EDS clients are up for renewal, and we're going to go after them."

While she wouldn't be drawn on commenting on the specifics of HP-EDS strategy, Ms Watts acknowledged that life was easier for IBM's services division after spinning off its printer division (now Lexmark) and selling its desktop computer division to Lenovo in 2004.

"They have the same issues as when we acquired PwC," she says, in reference to IBM's $US3.5 billion purchase of PricewaterhouseCoopers' consulting division, and its 30,000 employees, in 2002. "You have to make sure your consultants aren't seen as trying to flog their own product."

HP announced a $US13.25 billion deal to buy EDS, which has 137,000 staff, on May 13. Shareholders approved the deal August 1. HP New Zealand installed its own directors of EDS New Zealand during October, and the two companies are now moving to the sharp end of implementing their operational merger.

Worldwide job cuts of 24,600 are being made across the two companies - or around 7.5% of their combined workforce - in a bid to save $US1.8 billion in expenses a year.

More by By Chris Keall

Comments and questions

IBM are always circling around something to do with EDS.

I remember in 2002, some guy in IBM said they had their heel on EDS' throat and were going to choke EDS to death.

Well, EDS and HP have merged and the result is a bigger stronger business for IBM to circle around.

Good luck.

HP and EDS is now an unstoppable force working together aggressively to catch up to IBM. If IBM thinks it has an opportunity to steal clients away from HP-EDS, that's nothing but wishful thinking and pure hubris.

The only thing IBM needs to be concerned about right now is keeping the clients they have. Once HP-EDS are fully merged, the combined service offerings will be stronger than anything IBM has in its portfolio today.

Buy HP stock now!

On Monday morning, Decmeber 1st, I went in to work normal like any other day. Only to be tapped on the shoulder and told that we were no longer needed. After 4 years of employment, no warning, no nothing!!!!! Nice working for a company who cares nothing about the employees!

Welcome to the real world! It is the same where ever you go (or work)...organizations just cannot risk NOT walking you or me to the door when we're dispensible!
Cheer up mate, lest things get even worse...

No Raises, No Bonus, No parties, no rewards, no service awards, the list goes on. Oh and lets lay lots of people off to boot. For company who had an 18% profit - geeze it feels like we are about to go out of business. What is really going on? HP model 80% off shore - 20% on. Off shore being India or China... So if you are not in India or China - you are targeted, whether an individual performer or a leader...

Hi, I worked for EDS China (as one of the handful of people there receiving a respectable figure (Chinese standards), I wasn't surprised they'd let me go but I had hoped they would at least let me finish my labor contract... One day, I went to work and our Manager called me to his office... "I'll give you severance pay but please leave and don't ask questions..." I wish that old goat gets fired too... at some later date... He's as redundant as they get...

The layoffs hit far and wide-not a fun time to be at EDS.

Why is that most companies including EDS always fires or lays off Individual performers when they should be firing the middle managers and Team Managers who are not productive and not delivering anything? We are getting rid off good, experienced, skilled labor only to face with new, inexperienced and unskilled labor who can not deliver fast enough and ultimately, we will loose the client.

The practice of laying off good employees is not a good business.

Any consulting employee who is on the bench for more than 30 days is let go - regardless of years of service or skillset. All internal, non revenue generating jobs have been or will be rationalized. All salary increases have been frozen until 2010. For many (top performing) EDS employees this will be the third year without a salary increase - including those who bill at over 10 times their salary. Mr Rittenmeyer has had a new excuse every quarter to freeze salary increases. "Rationalized" workers are replaced with more expesive and less qualified contract workers. Or worse.. offshore workers. Sorry Mr Hurd but it's no secret that the offshore experiment isn't working as well as everybody had hoped - cheap labour is great, but you still need to deliver on time and preferebly on budget. All this when HP has still shown a profit even after the write down for the EDS purchase... HP stock??? HP/EDS leaders are using the same flawed quarterly thinking that started this meltdown in the first place. IBM are you listening?

Try 19 years..Monday morning, Decemeber 1st, tap on the shoulder. EDS is letting staff go without even looking at what the staff do. Last into the group, first out (and leaving staff that clearly should have been 'tapped' first). They haven't even turned over their work to the 'bestshore' staff.. just, you're gone. Well - surprise EDS clients, we don't have anyone to do the work, we neglected in our rush to 'save money' to look at who was doing what. Too bad, so sad... bye bye.

any contract specialist, contract administrators, procurement or acquisition specialist that are looking, please email me your resume.

any contract specialist, contract administrators, procurement or acquisition specialist that are looking, please email me your resume.

any contract specialist, contract administrators, procurement or acquisition specialist that are looking, please email me your resume. I am a recruiter for a contracting company.

Will say that HP is a much more nimble company than IBM. Also many more business savvy people than IBM. HP and EDS have a good amount of technologists that understand the business, having "been there and done that."

Ron Rottenmeyer was the worst thing for EDS, right up with Dick Brown. So getting him out of the picture portends great things for EDS going forward.

IBM is slipping, EDS is cleaned up and HP has moved past IBM. End of story.

This is a reply to last posting... "Ron Rottenmeyer was the worst thing for EDS, right up with Dick Brown."

How many executives like Ron and Dick will take before we the "Real" people or the employees will not be reaped of our benefits that should be coming to us rather than going into Ron and Dick's bank accounts?

How many executives like Ron and Dick will take before we the "Real" people or the employees will not be reaped of our benefits that should be coming to us rather than going into Ron and Dick's bank accounts?

Answer: Limitless executives because the "Real" people or employees have no control and our opinions are not relevant to their (executive) concerns. It's all short sighted thinking to achieve short term goals ie. (lining their pockets with gold) before they grab the golden parachute and say "so long suckers!".

Blech! I'm all for earning whatever the market will bear as long as it's done ethically. I haven't seen much in the way of ethics at EDS.

hmmm, it seems there are a lot a unhappy people at HP-EDS. Great companies have loyal and happy employees. I suggest you all put your CV's into IBM.

After all, running a product company is different from a service company. It's people business in a service company. If you can't keep your good people, you will not be successful. Unfortunately, HP uses a product-mentality to manage it's service business and EDS.

On a quarterly basis IBM has been laying off personnel with no mention in the press.

I was laid off after 23 years with EDS so that my job could go offshore. EDS, and everyone else, has been doing offshore for nearly a decade now. All the regular people knew it was a failure all along. It is the worlds economy that is hurting because of it as it is based on Americans and shortly only those with the golden parachute will be able to afford to shop at Walmart. Very short sighted indeed.

Rumor has it IBM is getting ready to have big layoffs, Happy Holidays from Sam.

I am one of the fortunate, I guess. My job is not being cut so far. It does not sound hopeful, when I read the above. However, I live meagerly and own a Kia and can barely make ends meet. I am in management. I was looking forward to possible being able to feel a little less squeeze in the New Year. Will not be happening. No increases for 2009! No bonuses. No nothing! Guess after I put in my 50 hours I will go work a second job at the mall!

If you are only working 50 hours then you will definitely be cut.

Not sure why you thing EDS/HP will lose NMCI. With HP's backing we are in better shape to gain NGEN.
As far as the layoffs, there were quite a few people that were cut that really were good or at least decent performers. It was a very harsh cut and one that I believe was handled poorly. Who cuts good engineers?!? They are the heart and soul of an IT service provider. If your are going to make cuts, cut redundant postions lke HR and finance and most of all upper mgmt. Engineers familiar with our TDLC and other processes are not easily replaced w/o expensive and time consuming trianing. Luckily their skills are vey marketable and with a secret clearance they should be able to bounce to a better job situation. I wish all those that were laid off the best of luck in achieving a new position with ac ompany where tehir work is valued and they are well compensated. Happy Holidays all!

So, the general public has a little insight to what is happening. HP laid off some highly skilled and good performing personnel in the last two months. The process was positioned as being fair, but it is not. Ann Livermore our Exec VP has to approve each request for removal from the WFR list if they apply for another job. If you do the math Ann Livermore would need 200 dedicated hours to completly review the outstanding positions in a 20 day window. Ann Livermore has better things to do with her time! It is my prayer that HP gets sued for the behavior I am seeing. By the way the major categories of people laid off were men age 50 and older.

This will all backfire bigtime for Mark Hurd once all these personnel get into positions of influence on buying HP products. HP will be giving away products just to keep the Mfg lines in India running.

Having dealt with EDS offshore staff, I hear the sounds of gravediggers' shovels. It took an hour for me to get help from their offshore "help desk" . You in the US might want to retain lawyers for bias suits.

Well we all knew once this happened that we were on the chopping block. This merger was good for only those on the board and huge stock holders. It was not about the employees. What is worse is that not only do they not care about who you are or what you have done for the company, They lie to you. Oh we have a meeting on Friday about your last report you submitted. Ok so thinking they want to say thanks for the 17 million in revenue I found. Nope. Sorry we are letting you go. So if you are in EDS and have a meeting comming up watch your back. Good luck to all that have been laid off. And Good luck to all of you still with EDS. See how many more layoofs happen after they lose GM and NMCI.

Believe me Ron Rittenmeyer is the worst, MOST GREEDY CEO that ever worked for EDS. He came in with the intention of selling out EDS employees and to get as much money as possible. He NEVER did anything for the employee. Well, he and a select few received their big pay-out and have mostly left the company. Mr. Rittenmeyer - how do you sleep nights? I know - you sleep fine, because you have no feelings for your former employees...

Big layoff for Big Blue coming soon

EDS is the worst company you can work for. In addition to the paycut announced on Feb 18, 2009 EDS had announced that it will be cutting employee base pay an additional 10% during the month of APRIL. I hate this place.

Had a good friend of mine that was very excited about working at EDS no matter what the rumors were, but was let go during TRAINING!!! Can you believe that, my friend was never given the chance to prove himself to the company, the management had already had their mindset on what they were going to do to my friend. That was just awful! He was deeply saddened by this, but he is working now and very happy that he is not with this company anymore.

I was laid off from EDS 7 years ago after 17 years of service with no warning either during the DICK Brown reign (notice that the first name is emphasized). Guess things have gotten even worse around there.

I am a retired manager, from EDS. During my tenure of many years, I found the company sunk lower and lower in terms of employee treatment as the years went by. At first, after the break from Perot, we (I was a senior account manager) we were definitely sensitive to our employees. As long as they worked hard, pro company and delivered they would be rewarded. Toward the end of my tenure, we didnt care at all. We lied to employees about bonuses, about raises (we called it recognition), we rigged customer satisfaction results, we rigged employee surveys, we dumped training and quality which we included in the price charged to customers and the list just goes on. From what I hear from friends still employed, HP is a soul brother. I really dont understand why anyone would do business with them and unless you are desperate for a job, I couldnt see working for them. The USA executives were all bluff and bluster, just staggering along to the next quarter, living on generous expenses, but generally an incompetent bunch. We were managed by greedy, morally bankrupt, manipulators of staff and customers.

Currently work for HP, coming from the old EDS days, and concerned for the moral at the company. We have to many middle level managers that are not doing enough to get the revenue numbers back up. Had several engineers in Enterprise Services (the old EDS), that have had good performance reviews in past years and had been positive role models that got negative performance reviews now, so they can be moved out of the company. I have a problem with the ethics in that situation of mid level managers doing nothing but protect themselves. Some of the more positive employees have now left for better opportunity. Overall in the Enterprise Services division have had poor leadership. IBM Global Services must be looking at these expiring HP service contracts to gain an edge in business.