Hewlett Packard Enterprise (HPE) will cut approximately 2,500 jobs following disappointing financial performance, the company said in its first-quarter earnings call on Friday. The Spring-based tech giant will reduce its workforce by roughly 5 percent by a combination of layoffs and normal turnover over the next 18 months.

The workforce reduction program, approved by HPE’s board on Thursday according to documents filed with the Securities and Exchange Commission, aims to address operational challenges and inventory issues that have affected the company’s performance.

“We could have executed better,” admitted CEO Antonio Neri during the conference call with analysts. Neri specifically highlighted problems within HPE’s server unit, pointing to a rapid shift in market demand toward the newest graphics processing units (GPUs), which has left the company burdened with excessive inventory of older models.

HPE Announces Global Layoffs, Impacting Houston Workforce

The layoffs will impact HPE’s global workforce of more than 60,000 employees, though it is unclear how many of them will be lost in the Houston region, where the company has approximately 2,000 employees.

HPE has offices in both Spring, where it has its headquarters at the City Place campus and Houston, based on its 2024 annual report.

HPE moved its corporate offices from San Jose, California, to Spring in 2020, opening up a huge footprint in the city. The reorganization is one of dramatic transformation for one of the largest employers in the area.

The company estimates to achieve approximately $350 million in cost savings in the reductions and similar savings in the future to the end of fiscal year 2027. The reduction plan will be phased in and will be fully effective by the fiscal year 2026.

Chief Financial Officer Marie Myers, during the earnings call, indicated that she has some apprehensions about additional threats to the company, namely mentioning the potential of new tariffs on Mexican and Canadian imports in the next year.

The cuts are set to take place at a time when Neri is one of Houston’s better-compensated executives. His 2023 total compensation package was more than $20 million, ranking him ninth among regional executives, the Houston Chronicle reported.

HPE Restructures, Cuts Jobs

HPE also became an independent company in 2015 when the former Hewlett-Packard was divided into two. Although the personal computer and printer business was acquired by HP Inc., Hewlett Packard Enterprise concentrated on enterprise technology solutions and products like servers, data storage infrastructure, networking equipment, IT infrastructure management software, and consulting.

The restructuring is a continued reorganization within the tech sector as businesses cope with shifting market conditions, supply chain challenges, and economic headwinds.

For HPE, the layoffs are an attempt to rationalize operations and boost profitability amidst these sector-wide challenges.

Local business leaders are monitoring for possible impacts on the Spring and Houston economies because HPE has become a significant corporate presence after relocating its headquarters to Texas.

There has been no statement from community leaders regarding the announcement or potential relief for impacted employees.

Throughout this 18-month implementation phase, HPE must contend with the dual challenge of rightsizing its workforce while preserving operational capacity and marketplace competitiveness in the fast-changing enterprise technology environment.