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By | Paul Kunert 20th June 2014 12:50

HP Enterprise Services staff feel the burn as managers turn off the cash taps

'We need to recover from the position we are in' says exec

HP is turning the screws on folk in its Enterprise Services (ES) division to squeeze out overheads in a bid to hit "specific Must Do Numbers" for fiscal '14.

On a global basis, ES revenues slipped seven per cent year-on-year in Q2 (May quarter) to $5.7bn and profit before tax was flat at $144m - the figures are not broken down to a local level.

At the time CEO Meg Whitman said ES service bookings were up but it needed to accelerate "cost savings and productivity initiatives".

With this in mind, and the fact that mega services contracts are harder to come by for all providers, HP "issued" seven Notices of Decisions - seen by us - to regional managers designed to "help us achieve these numbers". The earnings targets were not detailed in the document.

The policies cover overtime, travel, hiring restrictions, annual leave, training, internal projects, reduction of account business management and cluster implementation.

Chris Abbott, COO at ES, told staff they had saved costs on travel so far this year but "must do more". As such, "all discretionary travel is cancelled" until the 1 November, the start of the new financial year.

This includes both mileage-only travel and journeys already approved. HP advised the use of video conferencing and virtual rooms to overcome this, warning that expense claims will be "scrutinised and unauthorised travel will not be reimbursed".

"For the avoidance of doubt, customer-facing and directly customer funded travel should continue where operationally absolutely necessary," said Abbott. "These are actions we'd prefer not to take but they are absolutely necessary to recover from the position that we find ourselves in".

HP has initiated restrictions to hiring new ES workers or contractors for the year - all hires now require a Level 2 approval - meaning no third party should be recruited without utilising HP Global Procurement.

The decision is hardly surprising, given the recent confirmation from the company that it is to make another 16,000 staff redundant, taking the total tally in the 'Make It Better' process to 50,000 since 2012.

Planned headcount reductions at ES have been passed to the respective leads across EMEA and affected staff are on course to leave by 31 July, while others deemed surplus will be redeployed.

"It is assessed that by implementing this decision that we will see achievement of our FY14 exit headcount guardrail and improve our ES EMEA May FY14 Flash by $10," said the exec.

Abbott revealed that all Account Business Management (ABM) support to ES EMEA will be cut by 25 per cent versus levels in the first half of this year. Again "all surplus headcount to be either redeployed or exited" by no later than the end of next month.

The COO has relayed targeted staff reductions to the cluster and ABM leads, who are working with the Transformation and HR ops teams on providing the names of people to be made redundant or redeployed.

In yet another separate cost-saving policy move, Abbott confirmed that "people managers" will be asked to "invite staff members to take additional days unpaid leave" in the current fiscal.

Training is another area that HP is addressing and investment in career development training that is not part of an agreed "business focus re-skilling programme" has been suspended for the fiscal.

This relates to any formal training investment, both remote and in-room delivered whether from HP or a third party, even when the cost is only in man hours. Where training has already been agreed, "the most cost effective route to exit it to be followed", said the COO.

Any exceptions must be first agreed with Abbott, he confirmed.

The investment in internal projects across the global business unit or in accounts will be reviewed on a "zero-based basis" and any proposed internal projects will be "reviewed with the same rigour".

"Line managers for all resources shall actively assure themselves that the assignment of their people is to customer-funded works or an approved internal project," said Abbott.

"Where internal projects are stopped, due notice should be given to the line manager of assigned resources, to allow efficient redeployment of the released capacity," he added.

HP may be starting to improve results but the measures it is taking within ES show the division is still wrestling with the aftereffects of the recession.

An HP spokeswoman sent us a statement:

"These short-term initiatives are all part of our global transformation which we’ve been driving since May 2012. In order to win in the rapidly-evolving markets where we compete, we have to continue to make HP a more nimble, lower cost, and more customer and partner-centric company. We are building our advisory and transformation services to deliver the New Style of IT - services such as mobility, big data, cloud and security. We are also making changes to improve our service delivery by improving quality and efficiency. We strongly believe that our transformation efforts will enable us to better serve customers and partners in both the short and long term.”

So now you know. ®

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