Dell launched a major internal transformation this week with the goal of “simplifying how we do business and harnessing AI to reimagine work and customer experiences,” Dell executives told employees in an internal memo.
As part of the changes, the sales department has been restructured and management streamlined.
Dell also began a series of job cuts that some employees believe will continue through the quarter and could be the largest in Dell's history.
“Through a restructuring of our go-to-market teams and a series of ongoing initiatives, we are becoming a leaner company,” a Dell spokesperson told Business Insider.
Ten employees from across the company spoke to BI about what they think about the changes, all of whom asked not to be named because they are not authorized to speak to the media.
One sales support employee said her work had been stalled all week as she checked her email for meeting invites.
“This is terrible for morale in the short term,” the employee said. “I wouldn't be surprised if this goes into the trash until the next Tel.Del or until third-quarter earnings come in.”
“The metaphor being used is 'we're burning ships,'” said another, adding that the situation is “a bit of a dumpster fire.”
AI Strategy
The job cuts come as Dell rolls out its new AI strategy.
Dell has been piloting AI tools internally since October 2023 and is now putting its plans into action, applying AI across product development, content management, sales tools and customer service.
These tools will make staff more efficient, freeing them up to focus on more important tasks, Vivek Mohindra, senior vice president of corporate strategy, told BI.
As AI is introduced into the workplace, roles that involve more routine, repetitive tasks are expected to become unnecessary. McKinsey predicts that by 2030, 12 million workers will be forced to change jobs.
Workers said it was not surprising that layoffs began as soon as the strategy was launched.
“We expected it. It's a new quarter and we're working to shift all our support to be AI-focused,” said one laid-off sales rep who lost more than 60 people from his team. “I'd rather be laid off with benefits than quit,” the person added.
CEO Michael Dell speaking at Mobile World Congress. NurPhoto/Getty Images
Several Dell employees said the layoffs were tough but they understood that AI is changing the nature of work.
“From a purely business perspective, it makes sense,” one employee said, adding that some roles simply involved providing statements of work to other departments.
“We want to significantly reduce this particular workforce and replace it with AI solutions in order to give our salespeople more autonomy and speed up our current solution delivery process,” the employee explained.
Another person noted the rising cost of AI servers and said the job cuts were a way for companies to recoup the costs.
Become slimmer
Apart from the impact of AI and automation, many workers believed that restructuring and layoffs were unsurprising business decisions.
“Most of it makes sense – there's a heavy reliance on external sales channels that have deeper relationships with customers, so there's cuts in sales and marketing,” one senior engineer said.
The consolidation of various storage product teams has made some roles unnecessary, engineers said.
However, a downside of the reorganization was that team managers now oversee multiple products rather than focusing on one product.
Two Dell human resources officials told BI that the layoffs would bring the company's headcount to under 100,000. Given that the company has just under 120,000 full-time employees, according to internal company data reviewed by BI in May, this represents tens of thousands of staff being let go.
A Dell representative told BI that the company “does not report or confirm any of the numbers related to the restructuring that have been communicated to our internal teams.”
One human resources official said the goal was based on Bain's belief that to become a $100 billion company, it needs 100,000 employees.
Employees said they knew Dell had been working with Bain consultants on some projects since at least 2021.
More to come
Dell's stock was trading at around $180 a share in late May but has since fallen to around $91, valuing the company at just over $64 billion.
Three employees from other divisions agreed that Dell likes to run a lean operation.
“It's an ongoing tradition that everyone always says: When you get past 100,000 employees, you can always expect cuts,” the sales support person said.
Employees thought this meant more job cuts were on the way: “It's going to be a bad quarter. Let's be realistic.”
Do you work for Dell or any other company that's deploying AI tools? Contact this reporter at [email protected].
