infoTECH Feature

April 21, 2016

Intel Launches Restructuring Initiative, Decimates Global Workforce

The world no longer largely runs on the desktop PC. While there are still plenty of use cases that call for such a device—PC gaming, heavy-scale word processing and so on—more and more people are turning to tablets and smartphones to both work and play. That means firms like Intel (News - Alert)—who once built great empires on the strength of PC sales—must change as well. Intel recently launched a major “restructuring initiative” to accommodate this market change, and in the process, left a lot of people looking for work.

Intel has been rapidly moving toward a focus on cloud-based devices and the Internet of Things (IoT), a development that has fundamentally changed its operations and its culture. The growth of memory and field-programmable gate arrays (FPGAs) have become new growth opportunities for Intel, which saw $2.2 billion in revenue growth last year, accounting for 40 percent of the company's revenue and most of its operating profit. That allowed the company to better weather its PC market segment losses.

Yet despite this operating growth, which Intel's CEO Brian Krzanich called “a strategy that is working and a solid foundation for growth,” it wasn't enough to save fully 11 percent of Intel's global workforce, which is slated for reduction through the middle of 2017. Achieved via a combination of “voluntary and involuntary departures and a re-evaluation of programs,” the program is expected to yield $750 million in savings just this year alone.

On the surface, this might not add up. The company is growing, and looks to accelerate its growth, capitalizing on momentum from recent changes and increase a focus on its strengths. To do all that, it's going to almost perfectly decimate its work force. This is almost like saying that Ford (News - Alert) is planning to improve the top speed of its new Mustang by removing 11 percent of the engine. How can Intel generate continuing growth in comparatively new market segments by having 11 percent fewer people on hand to do the work? Certainly, cost savings help bring the necessary resources to the table to help fuel growth, and it may be that Intel has plans to make a lot of new hires in the more specific markets that it's targeting. It may even be that Intel didn't want to engage in a lot of retraining of the current staff to help focus on growth markets. As it sits, though, Intel seems to be focusing on growth by removing one of the key means to achieve that growth: the people who actually do the job.

Getting rid of the people who actually get the job done may seem like a counter-intuitive way to make the changes Intel wants. If this is just one step in a major process, the end result could be better for all concerned.




Edited by Stefania Viscusi
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