Lenovo to cut 2,500 jobs amid restructuring

Layoffs set for the first quarter will hit executives, managers, and a wide range of staff positions as the PC maker seeks $300 million in annual savings.

Chinese PC maker Lenovo confirmed Thursday that it is carrying out a restructuring, which involves the company letting go of 2,500 employees--about 11 percent of its workforce.

With the changes, the company is targeting to save $300 million annually, according to a Singapore-based company spokesperson.

Lenovo image

The announcement comes after a report surfaced earlier this week, saying that the PC maker would lay off 200 employees in its Beijing-based headquarters, including around 10 senior management staff. In response to queries from ZDNet Asia, Lenovo had dismissed the report as rumors.

At its U.S. Web site, Lenovo said the job cuts will be made globally during the first quarter of 2009. The axe will fall not only on management and executive positions, but also "in support and staff functions such as finance, human resources, and marketing."

Under the restructuring, Lenovo is consolidating its Greater China and Asia-Pacific operations--previously run as separate business units--and Russia into one. The new Asia-Pacific and Russia (APR) unit will be headed by Chen Shaopeng, who up until now was senior vice president and president for Greater China. Japan, Australia and New Zealand (ANZ) are separate from this new unit.

Among those affected by the move is David Miller, Lenovo's senior vice president and president for Asia-Pacific. The Singapore-based company spokesperson said Miller would remain with Lenovo for a "transition period" but declined to give a more specific time frame.

According to the spokesperson, cost reductions will occur in "nearly every business unit," and headquarter functions as well as duplicate functions in the new APR unit will be eliminated. "Quite a few of the Asia-Pacific functions housed in Singapore will now be housed in Beijing," she noted in a phone interview.

Lenovo's reorganization has planted three of the four BRIC (Brazil, Russia, India and China) countries, or emerging markets, in one single region while leaving out more mature markets such as Japan and ANZ, an analyst noted in a phone interview with ZDNet Asia Thursday.

"They've got the 'RIC' countries now," said Bryan Ma, IDC's director for personal systems research in the Asia-Pacific region. "Clearly they're looking toward this region as a big growth market."

Apart from streamlining, which is "good" in the current economic environment, the changes will "hopefully help to make the company a bit faster in addressing opportunities in the market," said Ma. One of the long-time concerns about Lenovo, he explained, has been that it seems "a bit slow" to respond to some market trends, especially in the consumer space.

Whether Lenovo's actions will bear fruit, may not be known until next year as 2009 will be challenging and "economically tough for any PC vendor", Ma added.

Vivian Yeo of ZDNet Asia reported from Singapore.

 

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