Dell asks employees to take unpaid leave

 

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By Reuters

Posted on 5 Nov 2008 at 08:12

Dell has asked employees to consider taking up to five days of unpaid holiday as it struggles to cut costs in the face of weak global demand.

The number two computer maker, which is near the end of a program of 8,900 job cuts, is also offering voluntary redundancy and has instituted a global hiring freeze.

Chief Executive Michael Dell announced the moves in an email to employees. He said he expects further consolidation in the technology industry, and encouraged companies to ride out financial turbulence by focusing on hard returns, rethinking businesses and investing.

"Being stunned into inaction is exactly the wrong thing to do right now," he told a conference in San Francisco, adding that the company is investing in cloud computing to deliver services over the web.

At the same time, Dell aims to cut operating expenses in its fourth quarter, said company spokesman Jess Blackburn. "The intent is to better position Dell for long-term competitiveness," said Blackburn.

"We are asking employees on a voluntary basis to consider taking off (up to) five days... as unpaid time off as a flexible way to reduce costs for the company." Employees are being asked to take the time off in the next three months.

Weak PC demand

Dell has seen soft global demand for personal computers because of the economic downturn. The company reported a steep dip in second-quarter profit in August and said it would sharpen its focus on increasing market share in emerging markets such as India.

The Texas-based company said in August it had cut 8,500 jobs out of a planned 8,900 headcount reduction to adjust its business for sluggish global demand.

Dell announced earlier this year it plans to reach annual savings of $3 billion in three years.

Speaking at Salesforce.com's developers conference in San Francisco, Michael Dell argued that the future of the technology industry is in cloud computing, rather than fixed on local computer hardware.

Dell said he expects 80% of Fortune 1000 companies to be using cloud services within the next few years.

He said Dell is creating a cloud of its own around IT services, and he predicted the company's efforts will ultimately help bring IT service costs down.`