Tech Layoffs: Decline in PC Sales Force Dell to Downsize Workforce

American-based technology company, Dell has recently disclosed plans to eliminate about 6,500 jobs following the decline in the sales of personal computers (PCs).

The reduction will amount to about 5% of Dell’s global workforce as the tech giant’s Co-Chief operating officer Jeff Clarke disclosed that Dell is facing market conditions that continue to erode with an uncertain future.

He further disclosed that the previous cost-cutting measures which included a pause on hiring and limits on travel, were no longer enough, hence the need to eliminate thousands of jobs to drive efficiency.

The sales of PC massively declined in 2022, dropping by more than 25% year-over-year in the last quarter of 2022. Every major PC vendor was faced with a heavy decline in PC sales, with Dell technologies being hit the hardest in the fourth quarter after experiencing as much as a 37% drop in sales.

Also, Hewlett-Packard commonly known as HP was hit the hardest in the EMEA market, where the shipments fell 44% year-over-year. For Dell, weak demand in the large business market affected shipments in the second half of 2022.

Last year, laptop and Desktop sales were down about 16%, compared to the previous year, Investors King understands.

Director analyst at Gartner, Mikako Kitagawa disclosed that the massive decline in PC sales can be attributed to the higher interest rates, global interest rates, and the anticipation of a global recession that is yet to materialize.

He further disclosed that the global PC market has now shifted from softness to deterioration while noting that enterprise buyers are extending the PC lifecycle and delaying purchases, which means that the business market will likely not return to growth until 2024.

Few other analysts have predicted that the slump in PC sales will last until the second half of this year, however noting that the long-term outlook remains positive.

In a poll conducted in December last year, around 250 PC channel partners by canalys revealed that 60% expect revenue to remain flat or decline in 2023.