'The pay is about half of what I make,' says HP employee told to take a new job or be fired
On the one hand, a job offer is better than no job at all.On the other, we've now heard from two workers who say the new offer is a huge pay cut.Advertisement
The offer comes from Ciber, an IT consulting company that resells HP products and has a labor partnership with HP.
HP is transferring a "small" number of employees to Ciber, HP confirmed to us. HP wouldn't comment on how many employees are being affected. Ciber declined comment.One employee told us that HP is targeting specific job categories for this contract-labor arrangement: people who are in application support jobs.
The new job offers disappoint
HP employees were told they'd have 48 hours to look over the job offer and accept or decline.One told us, "The Ciber offer is ridiculous. The pay is about one-half of what I make."Another told us that the offer was roughly $30,000 below market rate for similar jobs. This person told us the "offer is non-negotiable, at least it was for me."Advertisement
Their seniority is gone.
They can turn the job down but HP will still cut them and they will not be eligible for the standard layoff package, one week of pay for every year of service, multiple sources have told us.They will be given two weeks severance, one person said.Advertisement
We aren't surprised that Ciber's offers have come in below what some HP employees are being paid. HP pays going Silicon Valley rates. The average worker at HP makes $103,000, according to job-hunting site Glassdoor.
Ciber, based in Denver Colo., pays from $76,000 to $130,000, its employees report to Glassdoor, which are the market rates outside the Valley.In this case, the offers might be below market rate. HP CEO Meg Whitman has made it clear that she's looking to lower labor costs for HP Enterprise and these workers will remain as contract labor for HP. Revenue has been shrinking quarter by quarter at the unit, and profit margins have been all over the map, from 4% to 6%.Advertisement
Throughout 2015, Whitman has told investors she is stabilizing the unit and has promised to bring margins up to 7% - 9%.
In addition to shedding workers, she's automating more tasks with new technologies and replacing US workers with offshore workers.
Morale at HP ES is lowOne HP ES employee that has NOT been laid off told us morale at the unit was awful and the company was losing customers, although we have not been able to confirm which clients, if any, have dropped HP because of these layoffs.Advertisement
HP is trying to shift the unit away from labor-intensive, low-margin application support work and into higher-margin areas like mobile, security and cloud computing.
Rumors run wild ...
HP says only a small number of employees are being affected. A spokesperson tells us:HP reached an agreement with a strategic labor partner to allow more flexibility in managing labor demands. There are a small number of employees who will move from HP and become contractors to HP's Mobility and Workplace Services organization. HP will continue to own and manage the end-client relationship and overall service responsibility.Advertisement
We know that HP has done this in at least one other case. Last month, workers were told they were being transfered to contract-work company Adecco as of August 15, HP confirmed to us.We also know that by the end of the last quarter HP had trimmed nearly 52,000 and it will blow by the target of 55,000 people by another 5%, CFO Cathie Lesjak said.Advertisement
These additional layoffs are not expected to cost HP more money than the restructuring budget she publicly released months ago.
HP layoffs in HP ES have been going on for about the last seven years, since the unit was formed when HP bought EDS and doubled its workforce. HP has spent about $1 billion a year on restructuring costs.The company is set to split into two companies on November 1, with HP ES becoming part of the new HP Enterprise being run by Whitman. More layoffs are expected to offset the hiring needed to set up new HR, legal, administrative and IT departments, one for each company, Whitman and Lesjak have said.Advertisement