US-based IT services firm DXC has decided to cut jobs across the globe. The IT firm has decided to let go of 10,000 people, which comprises 7% of its workforce, i.e. nearly 50% of these job cuts will take place in India. There have been several layoffs in IT companies in India recently.
DXC was formed in 2017 with the merger of Computer Sciences Corporation (CSC) and HPE, the Enterprise Services business of HP. The company had a headcount of 1.7 lakh employees at the time of the merger. Now the employee count is down to 1.33 lakh. In India, DXC Technology employs 43,000 IT professionals. The country is a major delivery centre for application outsourcing and product development requirements. According to the company, these layoffs at DXC are a part of the major restructuring activity at the company.
A US SEC filing by the company suggests that DXC has spent $23 million in 2016, $238 million in 2017, and $803 million in 2018 on restructuring. To resolve this, the company is now following a cost rationalisation exercise and layoffs are a derivative of this strategy.
India is a key region for DXC and controlling costs is extremely important for DXC in India. As the company focuses on global expansion, going lean by downsizing has become an absolute necessity.
In India, DXC is also facing growth challenges. The cost of operations reported in 2017-18 was Rs 2,702 crore, while the net profit in India was down to Rs 276 crore. While the company has decided to cut a significant number of jobs, it is still unclear how much will be invested in hiring because of the rising needs in the digital areas.
In its Q4 investor call, DXC’s CEO Mike Lawrie said, “This balance between digital growth and traditional decline will continue to be lumpy as we go through the next year. But, this is the revenue dynamic that we talked about before that will ultimately support long-term growth for the company.