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Dell cuts costs with voluntary redundancies

Unpaid time off also offered to employees

Dell hopes it can weather the economic storm by implementing a number of new cost-cutting measures, including an enhanced severance package for employees who voluntarily leave the company.

Within the next couple of weeks, employees will be able to apply for a voluntary separation plan under which they can leave the company and receive a severance package that is better than Dell's regular offer, said David Frink, a Dell spokesman.

In addition, Dell is offering employees voluntary unpaid time off from one to five days during the company's fourth quarter, which stretches from November through the end of January.

The company also plans to reduce the number of contractors and temporary employees on its books, but Frink declined to say by how many. Dell has also put a short-term hold on global hiring, he said.

"It's based on being a prudent company and to better position Dell for competitiveness during a time of economic uncertainty," he said.

Dell is not providing a monetary figure for the savings it expects to realise from these moves, nor a savings target that it might be trying to reach, he said.

CEO Michael Dell outlined the plan in a memo he sent to employees on Monday.

In addition to the changes to its workforce, Dell has reprioritised some projects and spending, and reduced travel budgets across the company, Frink said. It will also reduce outside-services spending on noncritical projects, he said.

The moves follow a decline in profits but an increase in revenue for Dell's fiscal second quarter. Economic woes in Western Europe and the US were a drag on its earnings, Dell said at the time.

Dell has just about finished laying off 8,800 workers, as announced in May 2007. The current cost-cutting plan does not include further layoffs, Frink said.


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