Dell cuts 12,500 jobs due to restructuring and reliance on AI

Dell is reportedly laying off 12,500 employees as the firm restructures into a leaner structure supporting its transition towards AI. If implemented, this will bring the total number of job cuts at the tech giant to over 24,000 in the past 15 months.

In an internal memo to employees, the company’s executives indicated plans for the tech firm to grow faster than the market, and meet customers virtually or in person “to unlock the value of modern IT and AI for their organizations.”

Dell wants to focus on AI

According to Tom’s Hardware, the job cuts and restructuring will affect the sales teams which have seen declines in home PC sales. The company also wants to focus on data centers and related AI sales in line with increasing demand from the AI industry.

“We are getting leaner,” Dell executives Bill Scannell and John Byrne said in a memo to employees sent out Monday.

“We’re streamlining layers of management and reprioritizing where we invest.”

Internal memo.

Dell’s senior vice president of corporate strategy Vivek Mohindra told Business Insider that the environment is rapidly changing, and the company needs to focus on AI to keep pace with these changes.

However, Tom’s Hardware says that while tech giants are pouring billions of dollars into AI training and research, the major beneficiaries are firms like Nvidia that produce the hardware required to power the industry.

According to a study by Forbes last month, 77% of employees revealed that AI is only increasing their workload weighing on their productivity instead of its supposed transformative abilities.

Business Insider reported earlier this week that a pharma company canceled a Copilot AI deal citing high cost, low value, and “middle-school” presentations.

Dell thinks otherwise

While other companies see the downside of integrating AI systems into their operations, management at Dell still believes in the transformative abilities of AI. Mohindra spoke of optimizing operations using the technology.

“When you’re coding, you can have an assistant that can help you do the first revision of the code or debugging,” he said.

“That frees up the developer to focus more on the higher value-added layers of it, in terms of thinking about the architecture, and it increases the actual amount of time they spend coding.”

Mohindra.

With reference to external research, Mohindra revealed that AI increases productivity by 20% to 40% for a specific coding task.

The company is also looking to leverage AI abilities to enhance customer care.