Dell (DELL) just made a major cost-cutting move that confirms a major fear that is starting to haunt a lot of employees across the nation.
As a growing number of companies are experimenting with using artificial intelligence to improve productivity in the workplace, many employees have been concerned that the technology will pose a threat to their jobs.
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According to a recent survey from CNBC and SurveyMonkey, 42% of U.S. workers are concerned about the impact AI will have on their jobs.
For Dell employees, this nightmare has just become a reality as the tech company just revealed that it is boosting its investment in AI, and as a result, its workplace has just become “leaner.”
An estimated 12,500 Dell employees, who worked in the sales division, have been laid off from their jobs on Aug. 5 as the company is planning to invest in a new group that will focus on AI products and services.
“We are getting leaner. We’re streamlining layers of management and reprioritizing where we invest,” said Dell sales executives Bill Scannell and John Byrne in a memo to employees, according to a recent Bloomberg report.
A worker assembles laptop computers at the Dell stand at the 2013 CeBIT technology trade fair the day before the fair opens to visitors on March 4, 2013 in Hanover, Germany.
The executives also claimed in the memo that the company is aiming to quickly boost its growth by unlocking “the value of modern IT and AI.”
The last time Dell conducted layoffs was in 2023 when it shrunk its headcount by 13,000 people in an effort to reduce costs.
Dell appears to be doing well financially since last year’s layoffs. In its most recent earnings report, the tech company revealed that its net revenue increased by 6% year-over-year. Its net income also skyrocketed by 65%, boosting it to $955 million, compared to the $578 million it reported during the same quarter in 2023.
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“We again demonstrated our ability to execute and deliver strong cash flow, with AI continuing to drive new growth,” said Dell Chief Financial Officer Yvonne McGill in the earnings report.
Dell’s battle with workers over return-to-office mandate
The recent layoffs from Dell comes amid a rebellious tug-of-war the company is having with its employees over its return-to-office mandate, which requires employees to work from the office three days a week.
About half of Dell’s employees have reportedly opted to ignore the company’s strict return-to-office policy, as many of them have chosen to instead continue working from home full time, without fearing the consequences. This even comes after Dell allegedly rolled out a color-coded system in May that tracked employees through their badge swipes and VPN connections to ensure that they are working from company offices.
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