Dell fires 10% of its global workforce in major shift towards AI: Report

Dell announced a major chunk of layoffs on Tuesday (Aug 6) in a bid to shift toward AI products and services. The latest round of sacking is set to affect about 10 per cent of the workforce.

The exact number of employees set to face the brunt of the latest decision by the American tech giant has not been disclosed, but some estimate says the number is around 12,500 individuals. The restructuring will majorly affect the company’s sales teams, including long-standing employees.

The tech giant confirmed this development in an email to The Register, stating that it is "becoming a leaner company" through this reorganization.

Also Read | Elon Musk’s xAI raises $6 billion; OpenAI develops new flagship AI model

The company says its restructuring involves merging teams and prioritizing investments in a bid to enhance innovation, value and customer service.

In an internal memo to employees, Bill Scannell, President of Global Sales and Customer Operations, and John Byrne, Global Channels President at Dell, discussed "streamlining layers of management."

They emphasized Dell's ambition to outpace market growth by leveraging "the value of modern IT and AI" for client organizations.

Who all are affected?

As per various reports, these layoffs will primarily affect managers and senior managers, some with over two decades of experience at the company. 

One employee, speaking anonymously, told Business Insider (BI), “It was mostly managers, directors and VPs. They also hit marketing and operations. They combined organizations and also made the ratio higher for the managers. Now every manager has a minimum of 15 employees,” as quoted by BI.

Watch | Tech sector layoffs in 2024: Tech layoffs exceed 124,000 in 2024 as industry struggles

Reports also said most employees affected by the layoffs, are expected to receive a severance package comprising two months' wages, plus an additional week for each year of service, up to a maximum of 26 weeks.

The severance package may also include potential partial bonus payouts. However, some long-term employees have expressed dissatisfaction over losing long-term incentives and stock options as part of this process.

Also Read | World’s first AI software engineer Devin can write code with a single prompt

Amid multiple rounds of layoffs and backlash from ex-employees, Dell remains optimistic about its future, particularly with its new focus on AI.

Dell is also hopeful that a new generation of AI-optimized PCs will fuel upgrades.

"We aim to grow faster than the market by seamlessly meeting our customers and partners online, virtually or in person," Scannell and Byrne wrote in their memo.

(With inputs from agencies)