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Novell slashes workforce by 16 per cent

Novell slashes workforce by 16 per cent

Curriculum vitaes are starting to circulate IT industries both here and overseas, following Novell's decision to cut 900 jobs worldwide, representing 16 per cent of the company's workforce.

The cuts come as little surprise after recent reports in the US surfaced claiming the embattled networking vendor was looking to bring down the axe on as much as a quarter of its workforce (ARNnet September 4) in an attempt to bring its expenses in line with revenue.

The company, trying to rebound from several disastrous financial quarters, last week announced that the lay-offs will save approximately $US45 million. Meanwhile, it will take a $40 million to $50 million restructuring charge for employee severance, goodwill and prepaid software royalties in the fourth quarter.

Local implications

The cuts in Australia will see Novell's Support Centre in Sydney reduced, while the company undergoes an internal reshuffle around consulting services.

According to Cliff Smith, Novell's Australiaew Zealand managing director, the company will be cutting three channel support personnel and replacing their activities with Net services.

The resulting cost saving will free up Novell Australiaew Zealand to recruit additional sales and consulting staff to bolster its professional services division, a division that is one of the few truly growing business units for the embattled vendor in the US.

At the end of the day, Smith claims the open requisition of staff, backed by a 15 per cent local revenue growth over the past nine months, will leave Novell with more personnel than there were prior to the announcement of the cutbacks.

"We're looking to reinforce the progress we've made this year by moving into the services delivery business and offering more end-to-end solutions," Smith said.

Smith told ARN the changes around consulting services reflect "what customers are looking for" as well as an "evolving channel".

Novell will be approaching partnering with the channel in a number of new ways, claims Smith, to shed its traditional image of a pre-packaged software company.

Examples of this strategy pointed out by Smith see the company's consulting services leading the pre-sales cycle and securing the business, before turning to the channel for implementation. On the other hand, Novell's professional services can be used by the channel for "point consulting" with a particular customer issue.

But Smith was quick to dispel any underlying fear that Novell was trying to muscle in on the channel's highly sought-after services dollars.

"We're never going to grow our consulting services to be able to handle every deal," assures Smith. "There will always be a need for channel partners."

According to a statement released by Novell, the company will reduce its cost of doing business by approximately $25 million, beginning in the first quarter of 2001, while maintaining 4600 employees worldwide.


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