HP Inc. has announced a major global restructuring plan that will reduce its workforce by 4,000 to 6,000 employees by fiscal year 2028—around 10% of its total staff. The cuts will primarily affect product development, internal operations, and customer support.
According to CEO Enrique Lores, the restructuring is a central part of HP’s long-term AI-driven transformation, designed to streamline processes, improve customer satisfaction, and boost productivity.
Financial Impact and Expected Savings #
Lores revealed the following financial details:
- Restructuring cost: $650 million total
- FY2026 expense: $250 million
- Annual savings target: $1 billion within three years
HP plans to reinvest these savings in:
- 20% — accelerating product innovation
- 40% — improving customer satisfaction
- 40% — operational productivity
This announcement comes after multiple prior workforce reductions. Under the “Future Ready Transformation” plan launched in late 2022, HP has already cut 9,400 jobs, prompting ongoing concerns about operational stability.
Why HP Is Transforming: AI Adoption Meets Cost Pressure #
HP describes the layoffs as a “necessary step” in its AI transformation roadmap. After two years of pilot programs, HP is now deploying AI across:
- Product development
- Customer service
- Operations and supply chain
Lores emphasized the strategy: redesign processes first, then amplify efficiency with Agentic AI.
Strong AI PC Momentum #
HP reported that AI PCs accounted for over 30% of its total shipments in Q4 (ending October 31), outperforming the global average of 23%. According to Canalys:
- Global AI PC shipments (Q4 2024): 15.4M units
- Market share: Apple 54%, Lenovo 12%, HP 12%
This provides early validation for HP’s AI-focused roadmap.
Rising Component Costs #
HP also faces severe cost pressures. Morgan Stanley analysts warn that rising memory prices—driven by AI-driven data center demand and server competition—are squeezing margins across PC manufacturers.
HP’s countermeasures include:
- Sourcing lower-cost components
- Reducing memory configurations in select product lines
- Increasing product prices
Lores noted that HP’s current inventory can offset cost pressures until mid-2026, but issues will intensify after that.
Analysts Question HP’s Framing: AI Strategy or Cost-Driven Cuts? #
Despite HP positioning the layoffs as AI-driven, some analysts are skeptical.
Greyhound Research Chief Analyst Sanchit Vir Gogia argues the restructuring resembles a traditional cost-cutting response to:
- Weak PC demand
- Rising component costs
- Declining margins
He also highlighted operational risks, noting customer reports of:
- Slower warranty processing
- Delayed inventory updates
These issues have emerged as regional support teams shrink, raising concerns about service continuity.
Enterprise Customer Concerns: Service Quality and Procurement Cost #
The restructuring has created uncertainty for enterprise buyers. Key concerns include:
- Will customer support degrade?
- Will delivery cycles lengthen?
- How will product price hikes affect budgets?
Gogia recommends enterprise customers:
- Proactively discuss service changes with HP account managers
- Reconfirm points of contact and escalation paths
- Review existing service agreements for potential gaps
Reduced memory configurations and higher product prices may also require companies to:
- Reevaluate PC refresh cycles
- Adjust hardware budgets
- Diversify suppliers to mitigate risk
Industry Context: PC Vendors Shift Toward Lean Operations #
HP’s move reflects a broader industry trend. Major PC manufacturers—including Dell, Lenovo, and HPE—are adopting leaner operating models characterized by:
- Smaller teams
- More centralized operations
- Reduced product complexity
- Heavy emphasis on AI and cloud services
The PC industry faces slowing growth and rapid technological change, pushing vendors to transition from a hardware-centric model toward value-added services and AI-enabled workflows.
Outlook: Balancing Transformation and Stability #
HP’s long-term strategy aims to unlock new growth via AI-driven innovation, but it also introduces short-term challenges. Success will depend on its ability to:
- Maintain service quality despite reduced headcount
- Manage rising component costs
- Deliver on AI efficiency gains
- Sustain confidence among enterprise buyers
As Gogia notes, operational stability during transition will determine future market competitiveness.