About half the layoffs are expected to come from the US while the rest of the layoffs will be divvied up among combined companies' operations in the rest of the world. The severance package will include a parting check, counseling and job placement services. HP expects to replace roughly half of these positions over the next three years "to create a global work force that has the right blend of services delivery capabilities to address the diversity of its markets and customers worldwide."
With its $13.9-billion acquisition of EDS, HP believes it has the industry's most comprehensive portfolio of IT solutions at a time when enterprises are facing "an explosion of digital content, aging infrastructure and constrained resources" that will have companies reassessing their technology needs and whether they will manage things in-house or outsource. HP wants to assist companies in making decisions in this regard and be able to sell them something regardless of which decision they make. HP estimates that its acquisition of EDS boosts it share of the IT services market to 7%, putting it second only to IBM, which has an estimated 10% share.
As part of the integration, HP said it plans to restructure the EDS business group to streamline costs, invest in growth and drive shareholder value. HP says it has identified synergies in corporate overhead functions, such as real estate, IT and procurement.
At the start of the year, EDS and its consolidated subsidiaries operated approximately 218 locations in 42 states in the United States and 408 locations in 45 countries outside the United States. It owned approximately 2.7 million sf and leased an additional 22.6 million sf. EDS' leased properties consist primarily of office and warehouse space. Lease terms are generally five years or concurrent with the length of a client contract. In addition to its owned and leased properties, EDS occupies office space at client locations throughout the world.
EDS sold 16 domestic and international real estate properties in 2005 as part of a streamlining of operations. Net proceeds from the sale were $178 million. Fourteen properties involved in the sale were leased back by EDS for various extended periods. At the end of 2007, the company owned $1.7 billion of buildings and facilities and $60 million of land.
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