HP to cut 27,000 jobs worldwide - Updated

HP has announced plans for a major restructuring, or ‘productivity initiative’, that will see 27,000 employees – or 8% of the company’s workforce – exit the company by the end of fiscal 2014.

CEO Meg Whitman says the move will save between US$3.0 and US$3.5 billion, the majority of which will be reinvested back into the company.

"These initiatives build upon our recent organisational realignment,” Whitman says in a statement, "and will further streamline our operations, improve our processes, and remove complexity from our business.

"While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long term health of the company.”

Employees will be offered an early retirement programme to encourage older employees to leave the company voluntarily, while further savings will be sought from strategies like supply chain optimisation, SKU and platform rationalisation, go-to-market strategy simplification and business process improvement.

The reinvestment plan will focus on upping R & D spending in three main areas - cloud, big data and security - as well as ‘other segments that offer attractive growth potential’.

Update: TechCrunch has obtained a transcript of an internal video memo from HP CEO Meg Whitman explaining the rationale behind the job cuts.

"We’re struggling under our own weight,” Whitman says, "and we’ve got to restore a healthy balance in order to return HP to its position as a growing, thriving, innovating industry leader.”

Go here to read the full transcript.