Dell Fires 3000 US Employees, Requests 5000 Visas For Foreign Workers

Tyler Durden's picture

Submitted by Wolf Richter via WolfStreet.com,

Trying to find efficiencies and synergies to save $1.7 billion.

The ink was barely dry on Dell’s acquisition of EMC, the largest technology deal ever, valued at $67 billion when it was announced in October last year – and already the layoff rumors are oozing from the woodwork.

“People familiar with the company’s plans” told Bloomberg that Dell will cut 2,000 to 3,000 jobs.

Dell spokesman Dave Farmer refused to comment specifically on the report on Thursday but said instead, as sort of a confirmation: “As is common with deals of this size, there will be some overlaps we will need to manage and where some employee reduction will occur.”

On Wednesday, the day the deal closed, CEO Michael Dell gave some clues in an interview: “There are some overlapping functions and that sort of thing – that’s not the primary feature of this, but there is some of that.”

These “overlaps” or “overlapping functions” are terms in corporate speak for real people, and these real people are mostly working in the US, according to the report: supply chain, marketing, and general and administrative positions.

Dell is trying to find some efficiencies and synergies to save about $1.7 billion in the first 18 months after the deal closes, so starting from Wednesday. They’re not dilly-dallying around cutting costs and laying off people.

Combined they have about 140,000 employees. So the trimming might have a long ways to go, especially if the cloud and the Internet of Things are not as fun as imagined. But that doesn’t mean that the headcount will come down – they’re bringing in foreign workers, mostly from India.

Between 2014 and 2016, Dell applied for 2,039 H-1B visas and 256 Green Cards. EMC applied for 2,347 H-1B visas and 453 Green Cards, for a total of 5,095 applications.

These are just applications. Not all of them will be certified, and of those that are certified, not all beneficiaries will be hired. But the data for 2016 isn’t complete yet either.

It’s the hot thing to do for tech companies: laying off existing workers in the US, and bringing it foreign workers on H-1B visas. The Senate has been looking into some of the abuses. In February, Senator Richard Blumenthal (D-Conn.) sent US Attorney General Loretta Lynch a letter requesting a Justice Department investigation. But the tech lobby will likely get the Senate back on track soon.

But Dell needs to save some money, one way or the other. Dell’s corporate credit rating is at the upper end of junk. It’s loaded to the gills with debt, stemming from when it was taken private. Now the EMC deal has piled new debt on the company, including $20 billion of bonds it sold in May, followed by a $5-billion leveraged loan.

It needed this pile of cash to pay EMC shareholders $24.05 per share. They also got a “tracking stock” linked notionally to EMC’s interest in VMware, but in reality they get no real ownership of anything. Tracking stocks were hot during the dotcom bubble, with disastrous results for investors.

The combined company is also trying to boost sales, which they’ve been trying to do individually for years. All old tech companies, including IBM and Microsoft are trying to boost sales, and particularly those in the withering PC ecosystem are having the hardest time. They need to find a new niche for growth, and so they’re all piling into the “cloud” and the adjacent “Internet of Things” that links even the fridge to the cloud. But this is precisely where Amazon, Microsoft, Facebook, Apple, and Google dominate.

This is the situation Dell and EMC are in. Both have a large part of their products scattered around the PC ecosystem, Dell with servers and PCs, and EMC with storage devices. A match made in heaven. And so they’re going to innovate their way out of it! As Michael Dell said in the interview:

“We’ve got the ability to innovate at scale and invest – not for next quarter, but we have the agility and speed of a startup, but the scale and reach of the largest company in the industry.”

Alas, Dell became successful by building the same boxes everyone else was building, but it was building them on order, marketing and selling them directly, and getting customers to pay before their computers were even assembled, which was a new approach to supply chain management and working-capital financing in the 1980s: For the first time in history, accounts receivable were a negative amount, and working capital was funded entirely by customers, free of charge. Credit cards made that possible.

That was Dell’s big invention. It gave it a huge cost advantage, until everyone started doing it. But it wasn’t technological innovation. EMC is a different animal. But now it’s under Dell’s control, and they’re carrying a lot of debt, and cost cutting is going to be the big strategy going forward.

Mergers & Acquisitions often just lead to more shut-downs, write-offs, and layoffs. But somebody is making a killing. Read…  “Tech” Paid $5 Billion in Fees to Wall Street in 2016, and Look What it Got for it

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Son of Captain Nemo's picture

Donald Trump...

Where are you on this?!!!

piliage's picture

We know where Hillary and the congress is on this, buying the plane tickets and printing the visas.

MillionDollarBonus_'s picture

Let’s be honest, foreign workers just work harder. Americans are lazy, and foreign workers tend to be very ambitious. When you hire people on H1B1 visas, you’re getting the cream of the crop – people who are willing to travel thousands of miles to work in America. No wonder employers prefer them to entitled, slovenly Americans.

THE DEVASTATING EFFECTS OF CRIMINAL RECORDS

bamawatson's picture

black, white ?
hard, soft ?
chewy, extra crispy ?

Never One Roach's picture

Of the 3000, probably 2,568 of those Austinites were libs ... Democrat voters.

Today, jobless Democrat voters.

Tomorrow, Barristas!

Shocker's picture

So its about replacing the American Worker....

Layoff List: http://www.dailyjobcuts.com

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buzzkillb's picture

Peddling fiction. No layoffs, bankruptcies, or closings on September 4th (a Sunday). Similar to the FED posting an image on facebook with their calendar, and its blank.

cheka's picture

tariff foreign labor too.  somebody get this idea to trump

The Alarmist's picture

I was once given 5 years pay to walk away from a company ... no sweat off of their back since it came out of the restructuring pool.  Over the course of the next year, the Company hired two additional employees to supplement the "lucky" bastard who got my job, as it seems he couldn't keep up with all of the deliverables (which I had somehow managed to deliver on my own) and was spending a ton of cash on consultants to get the job done.

Dell is letting 3,000 US employees go and replacing them with 5,000 people not because they are going to achieve any great savings or boost in profit, but because the skill sets of the H1B's might be better or the same in some aspects, but will be woefully deficient in others.  In other words, they are hoping the productivity of the 5,000 is at least as good as the 3,000 natives and that the net savings in overall comp will make it worth their while.  Highly unlikely that it will.

bleu's picture

It's not Michael Dell's fault he's a DISEASED idiot who only cares about money. http://wp.me/p4OZ4v-Hn

migra's picture

A tariff on H1-B visas. Id say 200% of their gross annual pay would encourage companies to hire American workers. I like it.

Abbie Normal's picture

When historians look back, "Peddling fiction" will be known as this collapsing empire's Marie Antoinette moment.

peddling-fiction's picture

It got me to start posting here on ZH.

booboo's picture

No damn it!!!, it's about "synergy"  and if you don't know what "synergy" is well synergy is a made up bullshit office word thrown around at confrence meetings that disarm any steely eyed critic., I once won a contract this way, it was getting dicey, everyone was screaming and I yelled out "ITS ABOUT SYNERGY PEOPLE!!!" and that was that, dead silence, CEO took out his custom Cross Pen, signed the contract, slid it over to me and offered his 20 year old hot virgin daughter to me as a kicker if I would sign, well, Im here to tell you, the word is "synergy" and thats all.

 

The Alarmist's picture

Synergy?  Isn't that a midwestern power generation company that was swallowed up by DUK?  Oh wait, that was Cinergy.

ZD1's picture

 

yep, it is all about replacing the American worker... 

 

Caterpillar is firing 300 American employees in Mossville, Illinois, even though it is continuing to recruit and pay foreign “H-1B” guest-workers to do the white-collar jobs sought by American professionals in the United States.

 

http://www.breitbart.com/2016-presidential-race/2016/09/06/caterpillar-h...

The Alarmist's picture

You forgot to mention the "fact" that these are jobs that American workers won't or can't do, or some shizzle like that, at least not at the pay they are willing to offer.

Umh's picture

Very true, but they are angry at just big business since in their minds government is always good.

gearbaby's picture

Hardly, NOR ... Dell doesn't hire liberals ... only fucktard Repubs like you

ZD1's picture

gearbaby is delusional again after BLM thugs played the knockout game on his libtard head

JimT's picture

You know, its really dumbsh!ts like you that keep feeding the MDB troll that keep this annoying BS flowing.

CoastalCowboy's picture

Dude, MDB is a fun troll.  I laugh at his tripe have for years.

piliage's picture

I always picture him writing his posts sniggering whilst wearing a Paul Krugman mask and an I'm with Stupid t-shirt sitting next to his pet rock collection.

The Blank Stare's picture

Do they have to sign up for Obamacare? MDB....you're not funny.

Angry White Guy's picture

Ever since I started reading this site I've been trying to figure out if you're aggitating on purpose, or actually believe the total horseshit you're typing.

larz's picture

It doesn't matter who MDB really is. The scary part is a large swath of America actually does think like this

PTR's picture

And that, ladies and gents is the very heart of the problem.

Jeffersonian Liberal's picture

He fully admitted to me, after I continually pointed out the key points of effective satire, that he was not being satirical, that he was being completely honest in expressing his views.

With the absence of any writing skills in developing humorous and pointed satire combined with his admission, we have to take him/her at his/her word.

MDB is really that stupid of a leftist.

Consuelo's picture

 

 

Judges:

 

9.5, 9.6, 9.5, 9.5, 9.5

 

Gold medal territory as far as the eye can see, MDB...

 

 

kizell's picture

That's one of your best yet, MDB

Fine trolling

barron58's picture

They're not the best and brightest, I know I've worked with several over the years.  I have fixed or disqualified several crap designs they created. For the record I don't work in IT.
Based on the job board at work, their pay isn't that much less, they don't receive benefits and I believe the company receives tax benefits. 
One of them told me if they lose their job, they have a short period of time to find another or they lose their work status.  They work long hours out of fear of going back.

TheMeatTrapper's picture

"One of them told me if they lose their job, they have a short period of time to find another or they lose their work status.  They work long hours out of fear of going back."

This is true. 

I'm an IT consultant and I make a living fixing their "work". 

The corporations love them because they are virtual slaves. Middle level managers love them because they can treat them like shit, work them like dogs, lie to them and they will smile and say Yes Boss and will work all night without complaint. 

The managers can then use them to beat their American workers over the head. 

Of course, their work is shit from top to bottom. They could care less if it's right or wrong. They will simply do it, re do it and then re re do it. They have zero loyalty, zero morals and zero caring about a job well done. 

 

The H1B visa system is just another symptom of a country that is short sighted and morally bankrupt. 

Its_the_economy_stupid's picture

TMT,

You are of course correct. The India "headhunters" get the creria for the H1-b replacement, then "coach" then prospects how to build a resume, then forward the prospects, then geet a few grand for their work finding a hire. The hire, arrives, can't do shit, spends all day on a headset with other "H1-b hires or friends in India" who may know something about the language or structure needed for the task and create what would be the equivalent of a "bullshit" project at an American university.

The project managers in the US company have their number by week number 12 but fob their shit off on US workers to fix and use the threat of termination to keep the US employee overworked and underpaid. 

 

It is a hustle for start to finish. Everyone involved profits EXCEPT the US employee who shoulders the burden, as per fucking usual. Going "postal" will come back in vogue. You heard it here 1st.

zvzzt's picture

well, for once I agree with you.... there is an 'however', however... 

the main reason for choosing immigrants is not the work attitude (certainly not always), but the much lower wage costs. So in effect, due to regulations the local workforce is made too expensive and thus a (effectively) subsidized workforce is created via immigrants. Makes no sense and is strategically hurtfull in the long run. 

The line: "..... cost savings of 1.7 bln USD..." basically says it all: has nothing to do with finding a more effective/hardworking workforce, just cost cutting. 

Zarbo's picture

I have often wondered why upper management is not outsourced.  There are terrific cost savings to be had, and the replacements probably have better (fake) resumes and (fake) MBA degrees than the incumbents.  Shareholders would need to force the change, it's never gonna be "I'll replace myself to save the company money". /s

zvzzt's picture

Good point indeed. There is a small ( and I think fair) aswer to that: the layer of upper management is generally to thin to make too much of an impact on earnings/efficiency if, let's say, 50% is kicked out. 2000 'simple' employees costing 80k per year (earnings, insurance, workplace overhead etc) is equivalent to 160 upperlevel costing 1 million a year. 

On a sidenote, taxing the rich ain't interesting for the same reason: the less fat but much bigger middle class is a better target for the ever hungry .gov. 

City_Of_Champyinz's picture

Tyler(s) FOR FUCKS SAKE GET RID OF THIS IDIOT LINK SPAMMING DOUCHEBAG! 

espirit's picture

As long as you've been here you still haven't figured it out?

MDB is a Tyler.

OutaTime43's picture

Harder working eh? I know of one H1B1 worker at my company who sits at his desk all day on the internet.  Never gets written up. 

cornflakesdisease's picture

When you were born MDB, your mother didn't know which was you or the afterbirth.  They flushed both.  I culd have been your father, but your mom didn't have change for a quarter.

Occams_Chainsaw's picture

It's a good thing a racist like you supports blacks being unemployed.  Heckuva job Brownie!

philipat's picture

Preferred the old avatar MDB. It was more, well "in your face crass" which is the whole point isn't it?

Bunga Bunga's picture

According to your logic we should replace management and Wall St with H1Bs too.

Pickleton's picture

Any time the company I'm working for starts saying stupid shit like "efficiencies and synergies" in whatever mandatory meeting I have to attend, I start looking for a new job because it usually means they are going full on anti-American.