14 DAY TRIAL // Dell, the second largest computer maker worldwide, is struggling to cut costs on the background of the global economic crisis and is said to have asked its employees to take up to five days of unpaid vacation. As reported before, Dell is close to ending a 8,900 job cut program, but is also offering voluntary severance packages and seems to have instituted a global hiring freeze.
Michael Dell emailed the moves to employees on Monday, while expressing hopes of further consolidation in the technology industry on Tuesday. He also encouraged companies to mount financial bottlenecks by focusing on hard returns, rethinking businesses and investing. “Being stunned into inaction is exactly the wrong thing to do right now,” he revealed at a conference in San Francisco. Dell also said that the company is working on the so-called cloud computing to deliver services over the Web.
Jess Blackburn, a Dell spokesman, explained that the company is planning to cut operating expenses in its fourth quarter. “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 expected to take the time off during the next three months.
Dell ended the third quarter on October 31, and will wrap out the fourth on January 30, 2009. Due to the economic crisis, Dell registered soft global demand. The company announced in Q3 that it would focus on gaining more share in emerging markets. The computer maker also announced plans to cut off 8,500 jobs, meant to help it adjust its business for the low global demand.
Earlier this year, the company revealed its plans to reach annual savings of $3 billion in 36 months. While in San Francisco, Michael Dell said in that the future of the industry lies in cloud computing rather than in local computer hardware. According to Dell, around 80 percent of Fortune 1000 companies will be using cloud services within the next few years.
Dell also stated that the company is working on creating a cloud of its own around IT services, and added that this would eventually help bring IT service costs down.