Huge job cuts and savings of €1.25 billion per year are necessary, according to chief executive Brian Krzanich, but the full impact on Intel's 5,200 Irish staff is as yet unclear
The full impact of Intel's plan to slash
12,000 job worldwide on its Irish operation remains unclear almost a week after
the announcement was made.
The chip-maker, which employs 4,500 staff at
its Leixlip campus and 700 staff in Belfast, Cork, and Shannon, announced last
week that it was reducing its workforce by 11 per cent worldwide as it shifted
its focus from the PC business to data centres and internet of things (IoT)
projects.
Intel is looking to make annual savings of
€1.25 billion in a move that will bring staff numbers worldwide below 100,000
for the first time since 2011.
Intel's global staff numbers have shifted
substantially since the turn of the century, dropping below 80,000 in 2002,
before rising past the 100,000 mark in 2005. Then staff numbers fell below
80,000 in 2009, before the rise in recent years that has seen the firm flirt
with hitting 110,000 staff worldwide.
The decision to shift away from the PC market
comes after Gartner announced the global PC sector had fallen to its lowest
point in shipments in almost a decade during the first quarter of 2016.
In an email to staff, Intel's chief executive
Brian Krzanich said the proposed cuts were necessary to improve the
chip-maker's efficiency.
"These actions drive long-term change to
further establish Intel as the leader for the smart, connected world," he
wrote. "I am confident that we'll emerge as a more productive company with
broader reach and sharper execution."
Intel's Irish operation is not commenting on
the potential local impact, while business leaders in Leixlip and the IDA said
they did not want to comment until the picture is clearer. Despite the
potential impact on more than 5,000 staff across the island, human resources
experts said the technology jobs market remained buoyant.
"It's a mixed bag for a site like Intel. The
challenge for some staff who are more at the manufacturing end of that
business, it will be a slightly harder journey for them to come back into
something that they are happy with," Dave Burke, director at recruitment firm
Harvey Nash, told The Sunday Business Post.
"The good news is that a lot of these people
have backgrounds in engineering and other kinds of technical DNA. Due to the
shortfall [of staff]across the tech sector in Ireland, companies are very open
to people who have upskilled and retrained," said Burke.
"In manufacturing, there are areas like
pharmaceuticals and life sciences where there are significant new research and
development centres where staff are required. Those areas are quite buoyant so,
for people coming from production and manufacturing, with a little bit of retraining,
this sector will be wide open to them.
"It's always sad to hear when resources are
withdrawn from Ireland but at the moment, if you have any kind of technology
skill, there are fantastic opportunities as there is a massive skills shortage
in Ireland at the moment. There's a ton of companies looking for people and
they just can't find them. If you are a local Irish candidate with good
technical skills, there are plenty of opportunities."
Burke said the nature of large announcements
on a global scale often clouded the broader picture with regards to the health
of the tech sector.
"We take these kind of announcements with a
pinch of salt. For every large-scale cut like the Intel one, there are 15 or 20
smaller scale announcements of companies looking to expand by 100 or 200
people," said Burke.
To date, Intel has invested more than €11
billion at its Irish operation since first opening in 1989. The chip-maker's
commitment to the Irish operation was reaffirmed with a €4.4 billion upgrade of
the Leixlip site, the largest such private investment in the history of the
state.
Burke said that, despite Intel's shift away
from the PC market, past patterns in the recruitment sector suggested it was
unlikely the Irish site will be significantly impacted by the global cuts.
"They have spent a lot of money on that site
over the last while so it's not the first place you would expect them to
target. What's interesting about the move is Intel has been heavily reliant on
the personal computer market but if you look at the landscape of the use of PCs
and laptops over the last five to seven years, that has changed," he said.
Burke said the change in the PC market could
see a shift in focus at the Leixlip operation in line with Intel's global
moves.
"The corporate and office sector will always
remain, that's not going anywhere, but home use is remarkably on the decline
with people using their smartphones and tablets more to access the internet,
which was the primary use of the home computing device," he said.
"Intel is looking to move into a far more
lucrative market in terms of processors for data centres and into the IoT. It's
still a bit of a gamble because the IoT market is still a few years off but
maybe they are looking to get ahead of the curve."
The timing of Intel's shift to IoT could
reflect a need to be an early mover in the market, according to Darren
Freemantle, investment manager at Techinvest.
"They dominated the PC market for so many
years, but you could argue they missed out on the mobile side," said
Freemantle.
"There's definitely an element of timing. They
see the growth is there. People are storing less data locally and more in
networks that are essentially global. It's a huge growth area that reflects the
exponential growth in data storage and network traffic."
"IoT has been a bit of a misunderstood sector.
It's not just about consumer devices in the home. The reality is so much more
than that; every sector of the economy is going to have internet-enabled
devices communicating without the need for human interaction. There are
applications in transportation, logistics, medical devices, along with oil and
gas, and petrochemicals. That, in itself, is going to cause a further explosion
in the amount of data transmitted and stored."
Freemantle said the decision by Intel to cut
jobs globally would likely also see it create roles to support growth in its
newer businesses.
"What is happening with Intel reflects the
slowdown in traditional chip sales. There are job losses around the world but
they will also be creating jobs in other areas. They are shifting their focus
to more growth areas," he said.
"Data centres, as a sector, are exploding at
present. The amount of data that is being stored now compared to a few years
ago is eye-watering. There's a whole sub-sector of IT around that. A lot of the
big players, like Amazon, Facebook, and Microsoft, are all into it now."
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