HP Inc. is set to lay off between 4,000 and 6,000 employees by the end of its fiscal year 2028 as part of a strategic initiative to integrate artificial intelligence (AI) into its operations. The move, announced by CEO Enrique Lores, will impact teams involved in product development, customer support, and internal operations. With approximately 58,000 employees as of October 2024, the layoffs could represent around 10% of the company’s workforce.
HP’s decision aligns with its broader goal to drive “artificial intelligence adoption and enablement” while streamlining costs through workforce reductions. According to an earnings presentation, the company anticipates saving about $1 billion by 2028, albeit incurring $650 million in restructuring costs, with roughly $250 million of these expenses expected in fiscal year 2026.
Following the announcement, shares of HP fell nearly 6% in extended trading on Tuesday, continuing a downward trend into Wednesday with a decrease of over 2.5%. Lores emphasized that these cuts are not solely aimed at cost reduction but also reflect a commitment to “disciplined execution.” He stated, “As we accelerate innovation across AI-powered devices to drive productivity, security and flexibility for our customers, our focus for FY26 is on disciplined execution.”
The layoff announcement coincided with HP’s financial results for fiscal year 2025, where the company reported annual revenue growth of 3.2%, reaching $55.3 billion. In the fourth quarter, net revenue increased by 4.2% to $14.6 billion, marking the sixth consecutive quarter of revenue growth for HP. Earlier this year, HP had already undertaken a separate restructuring plan that resulted in the layoff of 1,000 to 2,000 employees.
During a media briefing call this week, Lores noted that HP has been implementing AI pilots for the past two years to enhance productivity and customer service. He expressed that successful AI integration necessitates a redesign of existing processes. “What we have learned is that we need to start from redesigning the process, and once we know how the process could be redone using AI, using agentic AI, it can really have a very significant impact,” he stated.
Agentic AI refers to artificial intelligence systems that can perform tasks with minimal human oversight, significantly improving efficiency. This concept is being increasingly adopted across various industries; for instance, services firm Capita reported it has used agentic AI in over 200 recruitment tasks to expedite hiring processes. A report from McKinsey highlighted that AI could potentially automate 57% of all U.S. work hours. However, the report clarified that while tasks may be automated, the need for human skills such as judgment and emotional intelligence remains vital in the workforce.
The implications of these layoffs and the shift towards AI adoption underscore a significant trend in the tech industry, where companies are increasingly prioritizing automation and efficiency. As HP aims to transform its operational framework through AI, the challenges and opportunities it faces will likely resonate throughout the sector.
For more on HP’s initiatives and the evolving landscape of AI, visit HP’s official website.
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