The reality of consolidation: Dell Technologies to cut 2,000+ employees

September 9, 2016

 

“We know how to win in consolidation,” Michael Dell told The Wall Street Journal of the massive EMC deal. “We’ve proven that and we’re going to prove it again.”


By consolidation, Dell probably didn’t quite mean laying off 2,000 to 3,000 employees. But that’s the plan now that his company has finally closed the largest tech acquisition ever with the roughly $60 billion purchase of EMC. According to a Bloomberg report, the newly minted Dell Technologies is looking to save some $1.7 billion in the next year and a half—and that’s where the cuts come in.

EMC wholly or partially owns many subsidiaries picked up over a decade spent acquiring or investing in cloud infrastructure and management firms and network security companies. EMC is rather unlike a lot of other targets in this way, as it really comprises what it and others have called a “federation” of companies (see members below). However, that has also created “some overlapping functions,” Dell said the day the deal closed.

To put the cuts in context, Dell Technologies employs some 140,000 people. Bloomberg has reported that the job loss column is largely to be populated by losses in areas like supply chain management in addition to general, administrative and marketing positions.

EMC has been acquiring network security, governance and authentication companies in cloud computing for years. And as the datagraphic below shows, so has Dell (which is backed by private equity firm Silver Lake). The result is a company primed to challenge the big players in this space, not least, of course, the market leader at $10 billion in sales last year, Amazon Web Services. With private and hybrid offerings that are more secure than what Amazon or Microsoft can offer, Dell Technologies could lure reluctant players into cloud storage with the promise of greater security that EMC's acquisitions provide.

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