Firms Shifting Focus

News on layoffs has become a norm nowadays. Some blame it on the economic slowdown, some on political bureaucracy while others blame it on offshore outsourcing. There could be a number of reasons for the job cuts but it all boils down to “cost reduction”.

Microsoft Corporation (NASDAQ: MSFT) sent a second wave of layoff notices to more than 3,000 employees. Microsoft issued a public statement regarding the layoffs saying they did it in response to the global economic downturn. And this might not be the end of the flying pink slips as Microsoft CEO Steve Ballmer explains: “As we move forward, we will continue to closely monitor the impact of the economic downturn on the company and if necessary, take further actions on our cost structure including additional job eliminations.” Though the company is applying cost cutting measures, Microsoft still plans to hire about 2,000 to 3,000 employees this year in some of its growing business segments.

Microsoft isn’t the only company chopping jobs on certain business divisions and moving them on more profitable business segments. Hewlett-Packard Company (NYSE: HPQ) is also capitalizing on current market conditions. HP reported a 17% decrease in second quarter earnings as sales fell on almost all of its business segments, especially its PCs, servers and printer business. HP’s services business, on the other hand, experienced a 99% jump in revenue due to its EDS acquisition, making it the firm’s largest business unit. HP seems to be shifting its focus. Instead of restructuring its main PC business, it diverted its attention to its more profitable services business. With its EDS acquisition, HP could go from a PC maker to an IT consulting and outsourcing firm.

HP plans to go head-to-head with International Business Machines Corporation (NYSE: IBM) in its venture into the services business arena. HP investors are happy with the EDS acquisition, they like the steady flow of revenue that comes with the services business, as well as the idea that services can be used to support other HP products like software and servers.

IBM doesn’t want to share any big technology outsourcing contract with HP. So IBM fires back by hiring a former executive of EDS. Sean Finnan is the former managing director of EDS in the UK and also served as VP for EDS’ CRM practice. IBM now has an edge over HP as Finnan knows how EDS’ business works, IBM could use Finnan’s experience to push their services business even further.

Going back to the layoffs, with every obstacle there’s opportunity and firms shifting business focus is a strong indication that this is indeed true. This could be the chance laid off workers have been waiting for. If this is going to be a growing trend, individuals need to find out which kind of job would likely get a boost from the shifting action.

Author: Kim G.

Source: Outsourcing Insider in association with BPOVoice.com