American technology giant, HP has announced that it will cut up to 16% of its workforce as part of a restructuring plan aimed at cutting costs. In its statement, the company said it will be cutting about 7,000 to 9,000 jobs through a combination of retrenchment and voluntary early retirement.

As per the company estimates, the restructuring will result in annual gross run-rate savings of about US$1 Bn by the end of fiscal 2022. HP said that it expects to return at least 75% of free cash flow, with a 10% increase in the planned quarterly dividend amount, and the balance returned to shareholders through share repurchases in the fiscal year 2020.

Enrique Lores, incoming President and CEO of HP stated, “We are taking bold and decisive actions as we embark on our next chapter. We see significant opportunities to create shareholder value and we will accomplish this by advancing our leadership, disrupting industries and aggressively transforming the way we work.”

It was announced in August this year that Enrique Lores would be replacing Dion Weisler as the new President and CEO.

Based on the current environment, HP is hoping to generate free cash flow of at least $3 Bn for the fiscal year 2020. The company also expects to incur total labor and non-labor costs of approximately US$1 Bn in connection with the restructuring and other charges. The restructuring is expected to be completed in the fiscal year 2022.

Currently, HP has about 55,000 employees worldwide, according to the latest filing with the US Securities and Exchange Commission. The announcement has left Singapore employees worried as there may be as many as 10,000 employees in Singapore or about one-fifth of HP’s global workforce.

A spokesperson from HP’s Singapore office stated that the job cuts were necessary for the company’s future. “To create the necessary capacity to reinvest in our business requires us to make some difficult decisions that impact a significant number of our colleagues,” the spokesperson told the media. However, the person declined to comment if there would be job cuts in HP Singapore.

Enrique Lores, who heads the $20 Bn printer business, is succeeding Dion Weisler as the Chief Executive Officer of HP Inc., effective 1st November, 2019. For the company, printer net revenue has declined 5 percent year-over-year, and analysts predict, macro issues around the economy will put a dent into commercial purchases of PCs and printers heading into 2020. The workforce reductions come as the Palo Alto-based company wraps up a three-year restructuring plan that included the elimination of up to 5,000 jobs. The job cuts are an indication of the tough times the technology giant anticipates in the near future. HP Inc.’s stock is down 10% so far this year, while the benchmark Standard & Poor’s 500 index is up 16%.