As the saying goes, when two elephants fight, or make love, the grass suffers. In the coming together of two US tech giants – Dell Inc and EMC – some employees will have to be let go.
How many? The company is not saying. “There will be some impact on headcount, but we will let you know that nearer to the date of actual merger,” Rory Read, Chief Integration Officer, Dell, told the media.
Dell announced in October a merger with EMC – the top multinational in computer storage and cloud computing which is holding its annual conference in Last week this week.
The $67 billion merger is the largest in tech history. On Monday, Dell Chairman and CEO, Michael Dell, announced here that the merged entity would be called Dell Technologies. The enterprise company, though, would be called Dell-EMC. Dell is a leader in PC technologies in the middle and lower segments.
So how do you merge two giants which will bring 70,000 employees of EMC and over 100,000 of Dell under the same corporate leadership and branding?
“By keeping the customer in focus,” said Howard Elias, President and COO of Global Enterprises Services, EMC, who is in charge of the integration project on behalf of the storage giant. He said a tem of 200 people had been set up to work out the merger. “Every step is on course.”
He said the coming together was “just weeks away” pending final regulatory approvals and a greenlight from shareholders.
Michael Dell had turned his company into a private entity by buying back shares of the corporation over two years ago. EMC too would go private before the merger. This would avoid some legal hurdles as well as obviates answers to pesky questions by shareholders or others.
To ease the rites of marriage, a management information and decision making system was set up by the two integration officers, escalating hundreds of decisions to the top for quick decisions. The integration team also worked out the basic requirements for regulatory approvals from several countries around the world. Final assent from the US authorities and the Chinese is awaited.
“What helped the preparation for the coming together is the similar cultures in the two companies, with the top one of ‘customer focus’ being the same,” said Read, with Elias adding that most employees had shown huge enthusiasm for the marriage. “What also came to our aid was that the overlap on product or services between the two was very low,” said Elias.
How would the merger impact the 5,000-odd employees of EMC in India and around 20,000 of Dell?
“I don’t know the number, though it’s likely to be low because of very little overlap between the two companies in terms of markets and products,” Dmitri Chen, Chief Operating Officer, Asia Pacific and Japan, of EMC told a small group of visiting journalists on Tuesday.
Some attrition on a small level had taken place in India after the announcement of the merger last year, but this was likely taking care of the built in redundancies.
Dell runs three call centres and has manufacturing and software divisions in Chennai, Bengaluru, Hyderabad and the National Capital Region of Delhi. EMC has a presence in Bengaluru, Mumbai, Delhi and some smaller cities.
Apart from the question of employee layoff, analysts this week, and earlier, have been asking how Dell would be able to manage the debt it would take on to merge EMC with itself.
Dell, with a turnover of around $58 billion and a profit level of around $3.2 billion would be absorbing $25 billion EMC, which made $5 billion profit. EMC has had subdued figures for last few quarters.
The debt that Dell would take on would be around $51 bill for the merger. Although Michael Dell has said that this amount would be retired over the next few years, analysts feel it won’t be easy.
The hundreds of employees of both the companies who came for the EMC conference were largely upbeat about the merger. A survey on the merger among the two companies elicited 75,000 responses, mostly positive.