Hewlett-Packard (HP), the largest computer company in the world, announced its plans to cut close to 24,600 jobs in order to streamline its business. The number of employees represents about 8 percent of its total workforce and the process will be carried out over a period of three years. The decision is considered absolutely necessary in order to properly integrate its newest acquisition, Electronic Data Systems Corp. The two companies have a combined personnel of 320,000 employees.

EDS’s purchase was completed in August, with a total of $13.9 billion, which made it the largest acquisition in the IT service sector. HP’s previous major buy was 2002’s takeover of its rival PC maker, Compaq, for $19 billion.

More than half of the cuts will be in the United States and some of the targeted departments are EDS’ finances, human resources and legal divisions. The company explained that it will provide severance packages, counseling and also job placement services. Still, HP’s officials explained that half of the positions will be added back as different jobs in different departments over the years to come.

The personnel cuts will translate into an annual financial save of at least $1.8 billion (with high hopes for a figure in the proximity of $2.5 billion) and HP’s officials stated that their new acquisition combined with their new strategy should add between 18 and 22 cents a share in profit for 2009 and 38 to 42 cents in fiscal 2010.

“HP now has the broadest technology capabilities in the market to meet customer needs today and in the future,” said Mark Hurd, HP chairman and chief executive. “HP has a strong track record of making acquisitions and integrating them to capture leading market positions. We will deliver on the promise of HP and EDS for our customers and shareholders.” He also added that "I can assure you there are other synergies we are looking for in acquisition. We will integrate this acquisition and we will do it well. We think we know what's necessary." He also stated that he is certain that once a company has the most effective cost structure it completely poses the ability to scale and grow.

Mr. Mark Hurd is also responsible for another major restructuring process, which was carried out in 2005, the same year that he signed a deal with the company. At the time nearly 15,000 jobs were eliminated and the move seems to have been beneficial for HP.

HP Executive Vice President Ann Livermore explained during an interview that the technology services represent a growth industry, with many of the major market players shifting to Internet-based services and also using new generation energy-efficient hardware to upgrade their data centers. At this point, IBM, which is the industry leader in technology services, appears to be very prepared for HP’s attack and not at all willing to leave the number one spot. The company announced several new major contracts and the upcoming launch of a new package of incentives which will be available for all customers that request IBM’s services.