Novell cuts workforce by 19 per cent

Software maker Novell Inc. announced 1,400 job cuts on Nov. 15, citing the overall IT market decline and expectations for a slow recovery next year.

The 19 per cent workforce reduction comes four months after the software company, which is based in Provo, Utah, acquired Cambridge Technology Partners Inc., an IT consulting firm in Cambridge, Mass. Novell also attributed its workforce reduction to an oversupply of IT consulting services capabilities in the market, along with the need to consolidate the combined operations of the companies.

Cambridge Technology Partners has had its own series of layoffs through the year, even before the Novell acquisition. It disclosed its third round of layoffs in April of this year, cutting 250 jobs, a move preceded by cuts of 280 workers in January and 400 workers in October of 2000. Cambridge Technology Partners former President and Chief Executive Officer (CEO) Jack Messman took over as Novell’s CEO after the acquisition.

“We didn’t have a big staff here anyway (in Cambridge), because we’ve gone through our own rounds of layoffs,” said Gary Schuster, a spokesman for Cambridge. “We’re taking out the jobs we think we have to take out.…The engineering staff in this layoff was hit, but not decimated. We still have 1,000-plus engineers in Provo doing the job and consultants spread out around the world.”

Novell’s customers focused more on seeing a return on their technology investments as the economy worsened through the year and senior managers began to take purchasing decisions out of the hands of IT staff, Schuster said.

“We’re going to continue to be a good vendor for those customers we have,” Schuster said. “We’re getting a better sense of what our customers want as we continue to put these companies together.”

The economy remains an unpredictable factor for Novell, as it has for many other tech companies this year. “Our crystal ball isn’t any better than anyone else’s,” he said.

Novell plans to write off certain other assets, and expects to take a US$90 million financial charge for restructuring, mostly in its fourth fiscal quarter. Novell was scheduled to report its fourth-quarter financial statement Nov. 29. The company estimates it will save US$200 million a year by making the reductions.