Intel Slashes Workforce Globally

by Sunil Kumar    Sep 06, 2006

On Tuesday, Intel announced that it will cut more than a tenth of its workforce as part of a drive to become increasingly efficient in the worldwide chip market.

As per the announcement, the 99,000 strong workforce of Intel will see a cut of approximately 10,500 workers.

In line with the amount expected by analysts, the cut includes 1,000 managers the company laid off in July and workers of two business units which it sold over the past few months. Intel said that it will incur about $200 million in total severance costs.

“These actions, while difficult, are essential to Intel becoming a more agile and efficient company, not just for this year or the next, but for years to come,” said Paul Otellini, President and CEO, Intel.

Most job reductions this time are expected to be in Management, Marketing and IT functions, reductions related to the previously announced sale of businesses, and also attrition within the organization.

In 2007, the reductions are expected to be more broadly based as Intel will reduce labor efficiency in manufacturing, improve equipment utilization, eliminate organizational redundancies, and improve product design methods and processes.

The shakeup comes less than 16 months after Otellini took over the reins at Intel from former Chief and CEO, Craig Barett. Also, with Dell choosing AMD over Intel, Intel has been losing competitive advantage recently.

Aditya Menon, CIO, Yes Bank Limited said, “The job-cutting at Intel does not in any way diminish its status as a leader in the server/ chip arena. As a CIO, my focus is on increasing usability and manageability in the organization. Intel has been more useful to me in terms of reducing TCO in the organization. AMD has been gaining ground lately and aggressively marketing its product offerings, but Intel has always been a pioneer in terms of coming up with newer technologies such as Montecito and vPro.”

However there is another side to the debate. Sanjay Sharma, Corporate Head-IT, IDBI said, “This is a periodic cycle of retrenchment in most IT organizations and MNCs in general. Reducing the project costs and maintaining core business interdependence is essential in any organization. Intel is cutting costs to stay competitive. As a CIO, I see no correlation with this announcement and Intel gaining ground over AMD. However AMD has come up with a more diversified portfolio of late.”

However, the general consensus is that this move by Intel aimed at downsizing will result in reduced prices and increased benefits for the customer and the enterprise.