back to article Class-action lawsuit claims DXC 'selectively timed' job cuts to inflate short-term profit target

DXC Technology has been named in another class-action lawsuit that alleges mass redundancies were used by senior management to boost earnings but left the company unable to service contracted clients properly. Bragar, Eagel & Squire PC, a New York litigator specialising in securities cases, lodged the papers on 16 September ( …

  1. Snake Silver badge

    "Being made redundant"

    Are workers really "redundant" if their absence means the workload no longer gets done?

    The reasonable answer is "no", of course, so the industry needs a better euphemism than "redundant". Try the simpler, "laid off" or "fired", instead.

    1. Fatman

      Re: "Being made redundant"

      <quote>The reasonable answer is "no", of course, so the industry needs a better euphemism than "redundant". Try the simpler, "laid off" or "fired" repositioned at a new employer in an effort to increase the executive bonus pool, instead.</quote>

      FTFY!

    2. simonlb Silver badge

      Re: "Being made redundant"

      In most cases the job role will still exist, but management have decided that there are too many people in the organisation and that there is enough capacity available for someone else to take over that role, even if there isn't. It's a tried and trusted formula in use by HP -> HPE -> DXC for the past six years or so.

      I feel sorry for whoever is still left there because they would probably love to get out to a less toxic company, but could well be hoping to get made redundant as the financial payoff might be worth waiting for. Either that, or they have Stockholm Syndrome.

      1. Anonymous Coward
        Anonymous Coward

        Re: "Being made redundant"

        Quote: "In most cases the job role will still exist, but management have decided that there are too many people in the organisation"

        The job still exists, yes, it's just virtually digitized. On our "transformation journey"... (you know this bullshit, don't you).

        For whoever is concerned, it's time to find a job where your values are not just virtually admitted but officially recognized. Wish you good luck

    3. Jon 37

      Re: "Being made redundant"

      It's part of UK law. It's hard to fire someone in the UK, unless:

      * The role is redundant, i.e. you don't need someone to do that job any more

      * Gross misconduct, e.g. stealing from the company

      * Documented poor performance over a period of time, with warnings given

      * You pay compensation for false dismissal of 1 year's pay.

      1. Anonymous Coward
        Anonymous Coward

        Re: "Being made redundant"

        "Gross Misconduct" can also include proving that your Line Manager is a two-faced lying butthole with a highly selective memory and (also proving) that some Employers are prepared to be extremely economical and flexible with the "truth" in Industrial Tribunals...

      2. joeldillon

        Re: "Being made redundant"

        It's incredibly easy to be fired in the UK if you've been employed for less than two years, since before then you can't go to an employment tribunal for anything other than the most obvious discrimination (i.e. an employer straight up saying 'I'm firing you because your'e black'). Thanks New Labour/Lib Dems/Tories!

      3. Anonymous Coward
        Anonymous Coward

        Re: "Being made redundant"

        "It's hard to fire someone in the UK"

        It's even harder in France. But it still gets done.

        (By using your final point. Plus a gagging order.)

    4. Tom 7

      Re: "Being made redundant"

      No not fired - that gives the impression that the worker was somehow performing really really badly like their managers and is wholly unfair.

    5. Anonymous Coward
      Anonymous Coward

      Re: "Being made redundant"

      The reasonable answer is "no", of course, so the industry needs a better euphemism than "redundant". Try the simpler, "laid off" or "fired", instead.

      They could borrow IBM's word, "Resourced". They're already borrowing enough other things from the IBM playbook.

  2. Pascal Monett Silver badge

    "The allegations in this suit have no merit"

    Um, sorry but the decline in share price is a fact, and that decline is clearly due to publication of news that the shareholders did not like.

    I don't like Wall Street, but one clear benefit is the ability to counter run-of-the-mill PR bullshit with cold, hard numbers.

    1. Anonymous Coward
      Anonymous Coward

      Re: "The allegations in this suit have no merit"

      It's lawyer-speak.

      It literally means the lawyer is unhappy with their current tailor and plan to bill the client excessively to afford a new suit from an even more expensive tailor.

  3. KjetilS

    "The Offering Materials also emphasised DXC's ability to retain "highly motivated people with the skills necessary to serve their customers"."

    Well, the people working for DXC probably has the skills necessary, but after being treated like that, I seriously doubt they will be highly motivated for long

    1. Anonymous Coward
      Anonymous Coward

      Exchanging experienced on-shore resources for inexperienced offshore workers, resulting in the remaining on-shore talent having to pick up the workload AND attempt to train the new people, all while earning less money year-over-year because "annual cost-of-living salary adjustments isn't how DXC operates".

      1. martinusher Silver badge

        PR people are also easy to hire and can be cheaper than IT staff.

        I suspect that DXC's layoff patterns also choose areas where its difficult to find another job without relocating. This tends to "highly motivate staff".

        1. Anonymous Coward
          Anonymous Coward

          I suspect that DXC's layoff patterns also choose areas where its difficult to find another job without relocating. This tends to "highly motivate staff".

          So kind of like IBM in the Lower Hudson Valley.

    2. Anonymous Coward
      Anonymous Coward

      Retain? Highly motivated?

      A blatant lie on both counts #GFDXC

  4. Doctor Syntax Silver badge

    "The Register has heard anecdotal evidence"

    Whilst science doesn't usually care for anecdotal evidence in forensic circles it's called witness statements.

    And good to hear of shareholders taking a class action against manglement and not against the corporation, i.e. themselves.

  5. h3nb45h3r

    Confused?

    I wonder if you did a search on El Reg stories with the keyword 'DXC', what percentage would be stories about redundancies?

    1. Mephistro
      Coat

      Re: Confused?

      About a 175%.

  6. Steve Davies 3 Silver badge

    Well doh!

    Even a blind man (or woman) could have seen this happening.

    Every 90 days, their masters on Wall St need to know what ritual sacrifices have been made by each and every quoted company or their stock tanks. Even if the EPS are $0.02 below average expectations, the stock can tank.

    DXC is just carrying on the tried and trusted 'right sizing and to hell with customers' that they inherited from Compaq who inherited it from DEC.

    This is now so ingrained in their psyche that they don't know anything else.

    1. Anonymous Coward
      Anonymous Coward

      Re: Well doh!

      The creation of DXC was a reaction to declining market share - the writing was on the wall 5+ years ago for HP's/CSC's outsourcing businesses and the hope was consolidation would address the market decline.

      Instead, it accelerated the decline.

      While Wall St plays a part in this mess, a business model that adds insufficient value and doesn't deliver tends to quickly burn through cash and people.

      If you want to blame Wall St, look at their inaction during Hurd's "we seem to make lots of money doing this, why change? What could ever go wrong?" period.

  7. sanmigueelbeer
    Facepalm

    The allegations in this suit have no merit and DXC fully intends to vigorously defend the case.

    Oh wait, we got rid of our Legal Department.

    1. Yet Another Anonymous coward Silver badge

      But then outsourced it to DXC

  8. Unexploded

    (jobs) being cut were held by longer-tenured, knowledgeable, & highly compensated senior personnel

    From the lawsuit. Had voiced similar suspicions earlier in the year, before getting purged this summer after 20+ years:

    Allegations: During the class period, DXC Technology Company made materially false and/or misleading statements and/or failed to disclose that: (1) the planned “workforce optimization” plan involved implementing arbitrary quotas; (2) the plan would cut thousands of jobs at the Company; (3) jobs that were particularly at risk of being cut were held by longer-tenured, knowledgeable, and highly compensated senior personnel; (4) these job terminations were selectively timed to artificially inflate reported earnings and other financial metrics; (5) at the time of the formation of DXC Technology Company, J. Michael Lawrie (the incoming President, Chief Executive Officer, and Chairman of the Board at DXC) had forecasted plans for a $2.7 billion workforce reduction in the first year; (6) as a result of these workforce terminations, the Company was unlikely to deliver on client contracts; (7) that, as a result of the foregoing, the Company’s clients would be dissatisfied and the relationships would be impaired; and (8) as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis.

    1. Anonymous Coward
      Anonymous Coward

      "job terminations were selectively timed to artificially inflate reported earnings"

      So they are complaining they acted the usual way to "maximize shareholder value"? Just it's going to destroy the company after a few inflated quarterly results?

      Do they really now want a long-term plan that includes paying clients satisfaction and an in-house skilled workforce, even if it needs more investments and good pays, reducing shareholder short-term profits?

      1. Anonymous Coward
        Anonymous Coward

        Re: "job terminations were selectively timed to artificially inflate reported earnings"

        "Do they really now want a long-term plan that includes paying clients satisfaction and an in-house skilled workforce, even if it needs more investments and good pays, reducing shareholder short-term profits?"

        No they don't. They want to make a quick buck from a legal action... its just opportunist... DXC was (allegedly) caught saying one thing while doing another that delivered an outcome was a loss for the shareholders.

        This goes on all the time with Wall Street.

  9. Cartimand

    Strange new use of the terms "retain", "motivated" and "skilled"

    Hard to reconcile the statement "...retain highly motivated people..." when every ex HP/CSC employee with any get-up-and-go took the redundancy money and got up and went a couple of years ago.

  10. Anonymous South African Coward Bronze badge

    The new way of doing business - ensure top manglement get healthy bonuses and that the shareholders are happy.

    Toughies for the workforce and customers.

  11. Anonymous Coward
    Anonymous Coward

    DXC cutting costs to pretend they made their numbers...

    Wow - who'd have thought it eh? It's a game they, and HPE/HP/EDS etc before them, have been playing for many years...

  12. Anonymous Coward
    Anonymous Coward

    Suckers

    The only chumps were the ones still holding the bomb when it exploded.

    The sharks had the money from DXC (and CSC before it) and ran off with it, the value didn't just vanish - it was trousered by Wall Street. They LOVED what happened and got very rich from it and applauded at every step. You only have to look at the quarterly figures, the analyst calls after each and the way the stock price sailed high. (the only time they ever bit back was after that El Reg reveal in November 2018...)

    Ironically some of those trouserers ultimately could benefit again through this class action as they could well have been shareholders during the qualifying period.

    Nothing special here, this is just post-2008 Wall Street. I'm not sure you could sue a financial system who's very existence is based on someone being a sucker.

    1. martinusher Silver badge

      Re: Suckers

      >I'm not sure you could sue a financial system who's very existence is based on someone being a sucker.

      You may have heard something about a 'cum-ex' scandal that's playing out in a courtroom in Germany. This isn't directly related to DXC but indicates the kind of activities that make the City, Wall Street or where ever the serious money. (Companies are just raw material for 'fintech' -- whether they actually make a product or provide a service is immaterial.)

      (It could be said that the whole Brexit thing may have been prompted by the EU starting to take a serious interest in financial firms' buccaneering, an activity that might benefit the insiders involved but directly threatens the health of viable companies and indeed countries.)

      1. Anonymous Coward
        Anonymous Coward

        Re: Suckers

        Yes its bizarre that Cum-Ex doesn't seem to get headline attention in the UK... its almost like someone in the UK is deliberately ignoring it. How "strange".

        From the website cumex-files.com I found this quote:

        "Some critics think the finance ministry was fully aware of cum-ex all along but hesitated to close it down as it was one of the few profitable business lines of banks after the 2008 financial crisis."

        And bringing this back to DXC, that quote highlights the problem - since 2008 there has been zero real economic growth and the Street have been anxiously looking for a source of income. This has manifested itself in both the full on crazy (cum-ex) and a myriad of other asset strip assaults on businesses all over the world.

        DXC was not a structure to create an IT services giant, it was a financial vehicle who destiny was always to implode but only after the money men had stripped it bare.

        I'm not sure its totally holed below the waterline at the moment, but its certainly on fire and listing. Its going to take a true visionary inspiring leader to get damage control underway though.

        Is that man Sal?

  13. Anonymous Coward
    Anonymous Coward

    leaving customers

    The Register has heard anecdotal evidence from staff that they are struggling to fulfil services contracts due to too many people being made redundant, but we have yet to be made aware of DXC losing customers due to the issue.

    That's because the customers are all still too busy leaving IBM, and haven't gotten around to leaving DXC yet.

  14. Mephistopheles O'Brien

    I'm shocked - Shocked!

    to think a company would use layoffs to boost its quarterly results!

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