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back to article Private pain: Dell layoff bloodbath to hit over 15,000 staffers – insiders

Two sources have told us Dell is starting the expected huge layoff programme this week, claiming numbers will be north of 15,000.* The company is returning to private ownership to restructure its operations in the wake of a falling PC market, a commoditisation of the server market and a perceived need to better serve enterprises …

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Hmmm.

Given how entirely useless Dell's consumer support was before sacking all these people, I have very real doubts if it will be worth even bothering the web site after they get rid of them!

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Re: Hmmm.

I've never had problems with Dell Enterprise support.

Now if they're going to get rid of the knowledgeable folks in Texas, I'll have a problem.

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Re: Hmmm.

You are lucky. The great unwashed are treated like supplicants at the throne, to be kicked or thrown to the pit of serpents as whim dictates.

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Re: Hmmm.

Yes, I've had to deal with both side of Dell support. Dell Consumer (as well as many other companies) is an off-shored mess of scripted troubleshooting steps designed to annoy the technologically adept customer. Dell Enterprise support is good, I too hope they don't ruin it.

Our current account team at Dell has been knowledgeable and responsive to us. I dread loose them.

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Painful, but might be the best approach

Laying-off 15000 people now, getting the restructuring right, and being able to hire again in the future may be very painful but it is a lot better than dropping 4-5000 here and there every year, year after year, never really fixing the problem, and destroying morale in the process. Ask HP, or Sun.

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And as usual...

the bright staff take the parachute and jump ship...

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Go

Re: And as usual...

the bright staff take the parachute saw the handwriting on the wall before Dell went private and jump ship got the hell out of there before the mass executions started...

There!!

FTFY!!!!

The most appropriate icon for the 'bright staff'.

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COBRA health insurance

As a note, COBRA is just a continuation of the employer's health care plan, but this coverage is not paid for by the employer. The full burden of cost is on the former employee, often hundreds of $ for the employee alone or well over $1000 per month for those with dependents.

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Anonymous Coward

the lucky ones are getting redundancy

the people getting made redundant are getting tens of thousands of dollars/pounds to walk away while the staff left behind get bonuses cut & little prospect of a payrise or career progression.

how can it make sense to reward the leavers and punish the stayers?

In the UK they are offering voluntary seperation at the moment but I'm sure mandatory will follow.

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Re: the lucky ones are getting redundancy

That's why they should have picked voluntary redundancy. If you don't want to work in a moribund industry with no real career prospects, GTF out of there.

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Anonymous Coward

Re: how can it make sense to reward the leavers and punish the stayers?

Ooh, I don't know. It's difficult to work out, but could it possibly be because the leavers won't get any more pay packets but the stayers will?

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Anonymous Coward

Re: how can it make sense to reward the leavers and punish the stayers?

If you've been with the company a reasonable time, the severance package is pretty good. Give you a big buffer to find a new job.

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Unhappy

Dude!

You're gettin' Dell'ed!

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These are tough decisions, but sometime it’s necessary to cut the hand to save the body.

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Opportunity here

The PC Market is changing, but it is not dead.

If layed off Dell employees pledged $10K+ each and 5,000 of the best formed a company they could put together $50 million dollars. Focus on one niche that they collectively have seen growing. They could approach suppliers with an offer to pay half up front, half post-sale for inventory. Approach bankers to fund the outlay for inventory secured by inventory. Do all the setup on the QT as much as possible so that when you pull the trigger a press announcement makes a splash. Initially limit this to people working at home and plow money into a good server infrastructure and a website that sucks less than Dell's current one.

Get everyone to take a modest hourly wage with a set-aside for dividends once the enterprise gains traction.

I have no idea how everyone feels about Dell right now. If both Suppliers and axed Employees want to stick it to Dell, this would be a window to do it in.

If they concentrate on the highest margin stuff, undercut a little, and give the kind of service you get from people whose income directly depends on it, they could leave Dell teetering on the brink. Dell would be attempting to staunch bleeding in losing lines, losing sales in winning lines and competing against a vigorous new competitor with zero debt, with a highly motivated workforce out to prove something. Dell, would be juggling enormous debt and attempting to execute with an entirely demoralized workforce wondering when the axe will drop on them.

Dell would probably attempt to stop people from forming a competing company based on non-compete stuff signed by the employees they axed. However, the common-law right to earn a living trumps that sort of thing. Unless Dell pensions them off at full salary for the 3-5 year non-compete period, they would not be able to force employees from doing something commonplace like opening a store.

Not sure if this is like other scenarios I have seen, but if it is, lots of the people axed were the good ones pulling the freight and lots of the people kept are brown-nosing corporate weasels whose skills are limited to stabbing co-workers in the back and climbing the corporate ladder.

Once the dust settles, the new company could pick the bones of the bankrupt remains of Dell. Take back the name 'Dell' if it has any currency and name the remainder -- wait for it -- Hell.

I honestly have no idea if Michael Dell is hero or villain. Just painting a picture that might be a pleasant daydream for former Dell employees hitting the bricks.

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Re: Opportunity here

The PC market is commoditised and sales are well down. People might be silly enough to raise 50 million, but what would happen is that they'll burn through that quickly and then find themselves out on a limb.

I doubt anyone wants to "stick it" to Dell - and Lenovo will eat their dogfood shortly anyway.

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Re: Opportunity here

Not even sure where to begin on this other than "dream on".

Do you have any indication of what it takes to manage 5,000 employees. You wont be paying anyone either. Once they handed their $10k , what exactly are they going to do with them all?

You got $50M which sounds like a lot but isnt.

And dont expect VC money either as its not an industry anyone wants to put more money in , especially when you got no chance of any revenue any time soon and a head count of 5,000.

Dell has buying power and are one logistic powerhouse. You cant compete against that overnight.

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Re: Opportunity here

Nice theory. However, I strongly suspect you've never dealt with the American "legal" system. Unfortunately, common sense and "right" have absolutely nothing to do with that process...

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Re: Opportunity here

If your going in position is to assume failure that is likely what you will find.

Dell started in a Dorm room and kick-started his company with less than $500K in capital. According to Wikipedia (not always the best source) he grossed more than $70 million in his first year.

Dell currently has revenues better than $500K per employee. The new people come from Dell. If they do this with 5,000 employees then they will have revenues of more than $2 billion. If they eke out a profit of 4% of revenues -- $20K they can give everybody their initial investment back at the end of the year.

I am not saying to deliberately pick dog products whose market is shrinking and then blindly pour $50 million dollars into it. I am talking about concentrating on the few products that are earners and growing. Dell has enormous overheads. You do not. Dell has to somehow support the money-losers until they are no longer losing money. Dell has to service debt. You do not.

Pareto's law rules everywhere and it will rule at Dell. Not every single thing this multi-billion dollar corporation is selling is a money losing dog. That would be statistically bizarre and Mr. Dell would be smart enough to walk away from something like that. Out of 15,000 employees I am sure there are 5,000 who between them have some clue as to what is producing the most profits at Dell right now. I am saying pick the few products producing good profits and go to the vendors you already dealt with and ask them for prices and terms to kick-start your business. They might do it on the QT to avoid annoying Dell, but you can bet one of them will do it.

If 5,000 people joined forces to do something they already know how to do and they started with modest overheads and were able to get some traction, would they agree to build sweat equity in their own company? I think so.

It depends upon who was kicked to the curb, but I have seen a lot of these bloodletting exercises and they cut plenty of great people. There is no reason to think this is any different. Out of 15,000 going, there are surely 5,000 people fit to join forces and carve a niche for themselves.

Re: 'I doubt anyone wants to "stick it" to Dell'

I have no idea how people feel about Dell generally. I expect that faithful employees canned on short notice may feel a bit let down. It would be nice for some people if they could show that they were a keeper.

Re: "and Lenovo will eat their dogfood shortly anyway."

Well if they are vulnerable to one competitor, why not another that has intimate knowledge of their business?

I would think that the main worry would be that Dell would attempt to enforce no-compete clauses and otherwise tie the new company up in court. If they do, that is a tacit admission that, in the opinion of the people who are most likely to know, the new company is a genuine threat.

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WTF?

Re: Opportunity here

Ugh, there are so many things wrong with your proposition I don't know where to start...

5000 ex-employees fronting $10k each?

I assume everybody will be working for free for the first couple of years?

Also I dunno whether you noticed or not, but there is no innovation in the PC hardware business in 2014.

There is no magic money-making product for these hypothetical employees to come up with - they could start a services company but why bother? Everybody's in a race to the bottom there.

I'd advise anybody thinking of following your advice to use spend their $10k on something useful instead, like a bag of cocaine or a few Apple certification courses

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Anonymous Coward

Re: Opportunity here

Trouble is, there is always the risk that you'll get bought by Dell. Then you're out on your arse again in another three years - when they try to build some half-arsed solution such as the Streak or Eqellent.

There are startups hiring like hell in NH and Mass, including DataGravity who are ex-Dell and in the same development park in NH as Dell's EqualLogic division. Plenty of places for good ex-Dell people to go in the Northeast.

Nevertheless, I like your idea. I'm meeting with several ex-Dell colleagues next week to discuss a new venture. I'm funding it with the money Mike gave me for my Dell share options.

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Anonymous Coward

Windows 8 strikes again...

How many more casualties will there be as a result of Microsoft's spectacular fall from grace in every sector of their business.

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Anonymous Coward

Re: Windows 8 strikes again...

YEAH! If only they'd picked LINUX Dell would be hiring not firing!!!!

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Anonymous Coward

Re: Windows 8 strikes again...

They could be selling chromebooks, the fastest growing sector and already a healthy 20%

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Re: Windows 8 strikes again...

Dell learned too late from Lenovo's Windows 7 playbook. Lenovo made (makes it) oh-so-easy to get a Windows 7 computer, whilst nearly all of Dell's glossy promotions pushed Windows 8, Windows 8, Windows 8, until recently. Last week's Dell ad in the mail showcased Windows 7 as well. Dell can blame itself for drinking the poisoned Microsoft Windows 8 Kool-Aid. Microsoft can blame itself, shooting off one toe after another.

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Anonymous Coward

Report more, speculate less.

So, you're getting some things right and some things wrong.

1. Your sources do not know how many people are being cut. There are about four people at Dell who have the exact number, and none of them are talking. People at Dell are counting empty cubes in their offices and guessing at a number because they are afraid of the worst.

2. There is a massive difference between an involuntary severance and a voluntary severance, and your article obscures the difference. For starters, voluntary severance means that people CHOOSE to leave. Dell has been running a well-publicized voluntary severance program which provides a significant higher level of redundancy benefit than you claim (in some cases, 2x the bonus you state), and probably 90% of people leaving are doing so because they want to. They were not asked to leave -- and in many cases, they were asked to stay. Are there involuntary severances? Yes. Are there many? No, and they are mostly limited to people who have had multiple poor performance reviews. Roughly 5% of Dell employees got one bad perofmance review, and so something like 1-2% of them have two bad performance reviews in a row.

3. Last week, you missed the announcement of voluntary severance across Europe. http://www.irishtimes.com/business/sectors/technology/dell-ireland-initiates-voluntary-redundancy-programme-1.1674021. So that IS coming and not happening this week.

4. If there WAS going to be a massive involuntary reduction this week, local press would be frothing at the mouth -- you'd see cameras in front of Dell Cherrywood or Montpelier, with journalists going nuts as downtrodden ex-Dellites trudged away to the pub. Hasn't happened.

5. If massive layoffs were happening, works councils and the EU would be involved. That isn't happening. Remember when Dell Limerick downsized? The screaming was heard as far away as Brussels, who ended up writing an E22.8 million cheque for "retraining."

Your basic gist is right, Dell is shrinking. It has to refocus and narrowing the workforce is part of that refocus. Personnel are worried. But it's not a "bloodbath", the sky isn't falling, it isn't going under, you'll still be getting a Dell (at least in the office)...

Please give it another try. You can do better that this.

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So all those jobs were soon going to China anyway.

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