Dell's Layoff Plans, Bigger than Estimated

The company will outsource more of its production

System vendor Dell has announced earlier this week that it will adopt a new strategy to shift its business back to profit. The new approach involves dramatic cost cuts, that will reflect in a number of layoffs across its board.

We have previously reported that the company plans to slash about 8,800 jobs in a three-year timeframe, which would allow Dell to aggressively cut the $3 billion overhead.

"We're kind of outraged the company didn't achieve all that it could in recent years," company's CEO Michael Dell said in an interview after a meeting in Round Rock. "We're determined to fix it, and that's what we're going to do."

However, recent rumors claim that slashing 8,800 jobs is just the tip of the iceberg, as the company is gearing up for more serious job slashes.

The most affected part of Dell's business is the Topfer Manufacturing Center, that will be completely shut down, along with another nearby Dell logistics center. The system vendor has already performed small layoffs, that account for more than 1,000 local employees losing their jobs in human resources and customer support.

"We're decreasing our head count. It's declined in the past two quarters and it will decline again in the first quarter. And we will go past the 8,800 target previously discussed as we achieve everything that I'm outlining today."

Dell's latest estimations claim that the company will go beyond the 10 percent workforce cuts announced in May last year. In order to compensate for the lack of local workforce, Dell will have to outsource more work to contracting companies. However, Dell will keep its high-value engineering and product design jobs in this country.

"We want to make sure that we have the highest value-add activities where the best talent is," Michael Dell said. "And certainly the U.S. is going to be the epicenter of that for the Dell world."

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