The world’s biggest IT company, HP, is cutting its global workforce by 7.5%, raising speculation that the firm is following the trend among IT multinationals for shifting resources from mature markets to growth markets in the East.

More than half the 24,600 job losses will be in the US over three years as the firm undergoes integration after its $13.9bn acquisition of Electronic Data Systems, the world’s second biggest IT services company.


Chief executive Mark Hurd told an analyst briefing that half of the jobs cut will be reinstated within 12 months in a restructuring to “create a global workforce that has the right blend of services delivery capabilities to address the diversity of its markets and customers worldwide”.

With more than 68% of the US company’s revenues generated overseas, the jobs are expected to be moved to India and the Far East.

Rival US computing group IBM has increased its investment in emerging countries by 12% in the second quarter of 2008 while cutting sales and administrative costs in the developed world by 1%.

But IT networking giant Cisco’s chief executive, John Chambers, warned earlier this year against overexposure to the uncertainty of emerging markets as companies become increasingly dependent on growth markets in an economic downturn.

The shift of resources to emerging markets will alter in nature as the cost differential becomes less significant with rising salaries and spiralling inflation, according to Gartner research vice-president Roger Fulton.

“New economies will have to follow a path of upgrading skills and eliminating jobs through greater automation and technology rather than jobs returning to the US and Europe,” he says.

HP’s rival hardware manufacturer Dell is reported to be selling a number of its factories and has cut more than 8500 jobs in a $3bn cost-saving restructuring over three years to address shrinking sales as profits plunged 17% in the second quarter of 2008.