Another 3,900 staffers gone, 3 data centres to be closed, and yet DXC revenues keep falling DXC's stock took a pummelling last night as the outsourcer published a grim set of figures for fiscal Q1 2020. Shares plummeted in after-hours trading, resulting in a market cap decline of nearly $3bn as revenues for the quarter shrunk by 7.4 per cent to $4.89bn from $5.28bn in the previous year. The bad news continued with …
No mention of how close to the cliff edge DXC are yet?
Or are they too busy failing to complete past promises to notice the future looks great because all of those problem customers are disappearing and they like the feel of the wind through their hair as they start to rapidly accelerate although it looks like the stop at the end might be quite sudden?
Still, it maybe worth investing in IBM shares to profit from the brief blip of a competitor leaving the market.
Not sure there will be a cliff edge in the DXC story.
DXC remains a profitable company, making $168m net profit in the quarter. However in the modern corporate world being profitable isn't enough; the company has to grow. Lawrie doesn't know how to grow the company in a rapidly changing market.
Revenue is down and, what's worse, the Street weren't expecting it. Do what you say you'll do and make or beat your numbers each quarter and the investors will love you. Miss your numbers and you have a problem. Investors have been seriously spooked by this and the share price is down some 30% today.
I still think that the DXC story has some time to run but it won't end well - I see continuing declines in revenue followed by a purchase of a much smaller DXC by one of the larger outsourcing companies.
Agree - a few more years before it is split up and sold - if the investors & shareholders are not happy with direction company is going they need to speak up, vote and get the status quo changed within the company reducing further waste, management overhead and a clearer Direction where the Digital journey is going.
"I still think that the DXC story has some time to run but it won't end well"
My knowledge of DXC is largely EU-based - they are struggling with new outsourcing deals and losing existing customers as customers either bring services back in-house or switch providers. Many of the customers will never use DXC again as the relationship has soured to the extent where DXC did almost nothing but collect service fees and wait for the contract to end.
DXC still have a consultancy role to play, but the challenge is that without a full range of products they will struggle to maintain larger customers leading to downsizing their consultancy business too, at which point they quickly implode in some of their markets.
As you say, there will still be a DXC, but I doubt it will be a global player within 3 years.
DXC, formerly CSC, are widely known as the "IT-supplier of last resort".
They are where ressource-challenged government agencies goes to maybe eek out a few more years of running their 1960's style legacy COBOL batch software on virtualised IBM and ICL mainframes.
It will be a sight to see when they go the way of Carillon and taxes cannot be calculated and collected.
I work for somewhere that has outsourced IT support to DXC.
We can't get projects done because they haven't the staff to do the work.
We can't get problems fixed because they haven't got knowledgeable staff to fix problems.
We've actually set up a first / second line support desk because it's more effective and cheaper to do that than to rely on DXC, although we still pay them for one.
I'm sure there's more.
Basically we can't shovel money at DXC because there's nobody at DXC to actually do the work so it's no surprise their revenues are falling as these companies traditionally make money on changes and projects.
This is what happens when you manage by headcount. Muppets.
there are still some of us here that can do the work - but nobody seems to be able to find us. And we tend to have too much work and not enough time. It's no wonder so many people put their hand up for voluntary redundancy, with more likely to leave before the end of the year through compulsory redundancy.
but, on the plus side - I got a dividend of 12p from my single share in DXC, and got to vote in the upcoming shareholders meeting.
so there is at least one vote against Mike Lawrie remaining CEO, and against the executive compensation package.
Probably they have laid off most of the experienced (i.e. well paid) staff and replaced them with overseas staff and kids fresh out of college who don't know anything.
That sort of cost cutting looks great to Wall Street, until you can no longer serve your customers and the business falls apart. But no matter, those responsible have been making bonuses for years and will walk out rich men so it was a successful strategy from their perspective!
College? Nope. The latest recruiting drive is for apprentices who haven't even passed their core Higher subjects (or whatever they're called this decade). Not enough knowledgeable staff left to train said apprentices, so yeah. Going well, that.
"Probably they have laid off most of the experienced (i.e. well paid) staff and replaced them with overseas staff and kids fresh out of college who don't know anything."
That is actually Lawrie & Saleh's strategy. They said pretty much exactly that, repeatedly, in an earnings call last year. They were quite proud of it which is why they kept repeating it.
Their reasoning was simple: inexperienced staff are cheaper. "Stranded costs" in their current definition is largely experienced staff who they haven't yet managed to get rid of, either because customers refuse to allow it (and is historically contractual so DXC can't ignore them), or because they're even more expensive to CR than they are to keep (and the staff know this so are waiting around for the pay out) but DXC haven't managed to make them so unhappy that they quit for free.
So effing true.....finally got out but at a customer they "support" still.....customer getting pissed enough finally, to start doing something about DXCs major failure to provide support. DXC : Worst company I ever worked for!!!!!!!!!!!!! Was layed off 4x...this last 1 was it for me!!
Well, if things went logically, they'd get rid of the highest cost, lowest return items first. So when's the CEO and the rest of the senior management getting replaced by people who are just as good or better but willing to work for a fraction of their pay? Instead of getting rid of the staff that were there to actually bring in revenue, and without which they cannot operate?
Whilst it would help to some extent, replacing the CEO and senior management with cheaper replacements wouldn't save that much as there are relatively few senior executives on seriously big money.
Where there are big savings to be made is in 'middle management' - the L3/L4/L5 layers. There are hundreds/thousands of people in these positions earning large salaries but it isn't clear exactly what they do. Filleting those layers would make significant savings.
Agree biggest overhead is middle management; look at what they do or not do, what they bring to the Digital journey and if there is any overlap or earmarked management is not up to the job then WFR. It's no time for half measures now - it needs drastic and strong change now.
I'll tell you what L3/L4/L5 do - exactly what they are told by L1 and not a single extra thing.
In a properly functioning company with devolved powers to drive the various divisions along, these people are the key to success.
In DXC there is only one person allowed to make decisions.
Its this absolute dictatorship that is the root of all of DXC's problems - and I'm not using the word "dictatorship" just to be nasty about Mikey, its the actual case of that is how the company works.
Others won't believe me, but trust me, that is why its so chaotic and fails so hard - just like CSC did when Mikey took charge of that.
So yes, I agree that L3/L4/L5 have no purpose. Automation could replace them - an inbox rule in Exchange server.
Exactly this.
ML is absolute ruler, he comes up with a madcap scheme that he thinks will save money because that what the cell on the spreadsheet says and then someone far down the food chain has to say "That's not legally possible in France/Germany/Italy/even in the UK" or worse "That's not physically possible" and that's just the ones that are easily provable. Then you get in to the ones that are bleeding obvious at the coal face but harder to prove to remote clueless execs. There are no L2/L3/L4 left that will say no to ML so the nonsense keeps on coming.
But it's all OK because ML's apology to staff about how the Q1 redundancies were handled was really genuine and sincere! Not sure what was funnier how after the "apology" he said how vital the people managers are, when he's the one that ignores them or how much money he's lost since the share price hit it's new low.
DXC is doomed, if it lasts 2 more years I'll be amazed.
I still work in this madhouse. In HP I used to run small team and I was the last one in the chain, below me there were no managers anymore. I was L5 then, for a moment just before merger even L4. After merger and "organizational changes" done CSC-way I became L8 and there are still 2 L9 managers below me (managing teams of less than 5 people each). Of course we still do exactly the same work as in HP. This is madness, nobody has any idea what all those layers above us do (if anything at all).
...is a comment in another website about Mikey.
He already has. A young employee (35-ish) jumped from the 11th floor at a Bangalore office last year. He had been transferred from another location and shortly was informed he was going to be laid off. He cried and ran to the top floor and jumped from there. We were all shocked. The MF that is called HR did not even have his family contact details to inform. And they bribed the local police and media to hush the matter. Mikey, his GF, the shareholders and Board of Directors all literally have blood on their hands.
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There have been over 30 deaths of DXC employers due to the stress the workers were under trying to meet SLAs yet losing co-workers constantly..,I know 1st hand.....I am so thankful I am no longer working for this abomination of a company!!!!!
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I had the 'experience' of working for HPE/DXC for a couple of years and it is, without doubt, the most shambolic, stressful place I've ever worked. Whitman / Lawrie - the rest of the Exec just doesn't seem to realise (or care) that if you focus on costs- that's what you'll increase. Deciding to leave was the best decision I have ever made. I took a pay cut - but the other rewards (job stability, respect, supportive culture, a career path) far, far outweigh the monetary side of things.
As others have said, I give them 2..maybe 3, years before what remains is bought by an Indian pure-play. Unless you're on a good package / contract that wull pay well when the WFR hits (as it inevitably will), do yourself a huge favour and leave.
I worked in a low level team in DXC for almost a year now and it is total sham.
Nobody knows what is happening.
We are suppose to be intelligent people with knowledge in many areas, but the only thing people seems to be good at are writing meaningless emails to the customers and spending up to an 1 hour just composing email, that is supposed to be technical, with a lot of explanations, but ends up like the speech of a politician.
The skilled and good people have left, but less than a year would look bad in my CV.
DXC is losing clients left and right, big, small, European, American, Australian. Just in the past 2 weeks my team lost 6 of the 25 clients, 4 of them terminating their contracts halfway.
One of the most idiotic things I have seen in this company - for one client there are 3-5 managers working only for them, 2-3 sales people who work with only one client and have no idea what the client industry is, what he needs or what he uses in his infrastructure. After that there're 2-3 people on other positions only for this client. .... These people are some of the most useless people I have seen and all of them are just working as communicators with the client. And they keep adding more of them, as if sales people would compensate for the lack of people who can support the offered service/software/hardware.
This week I'm planing to stop working for at least half of my day and start preparing for my next job.
PS: I leave my real name, not much point to hide it.
I never worked for them, at a party I did meet a manager boasting about how he'd made the staff work late to solve a problem. I wasn't impressed then. My manager will stay until we tell her to go home because she's no longer able to add anything, she's also smart enough to know when we want to be left alone.
I'm about to be out, just send my resignation letter today, 2 weeks notice count is on!. Agree completely with you, almost all the US people got fired on VPC, and the ones that resign are not being replaced, leaving the rest of the team with work overload and tools orphaned (who the hell is in charge of the labs?), the permanent employees on my team went from 4 down to 2, I got hired as a contractor with almost half the pay of the permanent employees, when you get hired you are thrown straight to the lions, no training at all, not even a welcome letter, they all expect you to know how to use the internal tools and processes (SM9 anyone?) without any training, the team manager can be replaced by a chatbot, he brings absolutely nothing to the team, all the responsibility is on the so called "team supervisors", that are just former HPE employees lashing whatever is left of the team forcing them to do extra time to attend incidents and changes, reminds me a lot of Samuel Jackson's character on Django Unchained, lol.
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