Although it's buying Engenio from LSI, NetApp is not taking on the European LSI Engenio sales team who all face losing their jobs. NetApp agreed to buy LSI's Engenio storage business for $480m in March. That business earned $705m in 2010 and NetApp's buy price is only a fraction of that. "NetApp gains a proven OEM-based …
Short sighted business practices
I suspect that NetApp's decision to not take the European Engenio staff is due to the EU employment rules where basically if NetApp takes one employee they have to take them all and at their existing terms and conditions. Oddly a rule designed to protect employment seems to be a reason for doing the exact opposite. In the UK the rule is awkwardly called TUPE. I wouldn't be surprised if NetApp isn't held to account for this to some extent since the wording in the regulation implies that taking the business as a going concern requires them to take the employees so unless NetApp plans to no longer do business in the EU they would seem to be in violation of these regulations.
But set aside the regulator aspect of this. Set aside the fact that a company who fails to show loyalty to employees shouldn't expect it in return. Just look to the ongoing business being done in the EU and one has to wonder if those OEM business, distributors, vars, business partners and customers are going to have second thoughts about how valued they and their business is to NetApp. I have heard that NetApp is taking 960 employees in the US and the 50 or so in the EU comes to a pretty small number especially if you consider that at least half of them are extremely valuable to the ongoing operations of the company. This means that for a very small 15 to 25 employees NetApp has decided that it is easier, cheaper and better to basically throw everything out the door and into the bin.
In the long run NetApp is bound to manage the situation but it really is one that was done thoughtlessly and needlessly and what ever money or effort NetApp thinks they are going to save is bound to prove to be a false economy.
The good news is that the competition for NetApp is going to get some very good and now highly motivated new employees.
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