HP slashes ex-EDS salaries up to 47 percent: “It’s a slap in the face”

August 5, 2009 | Paul Boutin | Comments | |

edsBefore the World Wide Web, working for Ross Perot’s IT outsourcing firm EDS was one of the most prized and prestigious jobs in tech. EDS, which Perot founded in 1962, defined the outsourcing business and made Perot a hero to both businessmen and techies.

Perot resigned in 1986, but his brash, I-always-win style continued as part of EDS’s professional brand. (Perot ran for president as an independent candidate in 1992 and won over a that’s-impossible 39 percent of voters in polls, before he awkwardly dropped out of the race.)

Last year, HP acquired EDS and its 137,000 worldwide employees for $13.9 billion. Now, some of the acquired staffers have told NBC Bay Area reporter Randy McIlwain that HP has slashed salaries from 29 to 47 percent among the people from whom McIlwain got numbers. HP has made several rounds of cuts, the most recent of which will take effect September 1st. Only employees based in the U.S. are affected by this latest, deepest cut.

HP CEO Mark Hurd took his own 20 percent haircut, from 10 million a year to eight. But for a techie making, say, $120,000 a year, Hurd’s gesture doesn’t help. “It’s a slap in the face. That’s the only way you can take it, is that it’s a slap in the face,” one employee said.

The most striking aspect of the EDS cuts is that most of these senior, accomplished employees didn’t talk about quitting. They told NBC Bay Area that they’re hanging onto their reduced-pay jobs, afraid there’s nothing else out there. A couple of years ago, some of these Texans would’ve gladly slapped Hurd back as they walked out the door. Tomorrow, most will pocket their HP badges and show up for work.

Update: An HP spokesperson emailed me this statement:

“As part of the EDS integration process, a project was undertaken to ensure that employees in both EDS and HP, holding the same roles, receive comparable compensation based on market rates. While pay will not be impacted for the majority of employees as a result of this process, some employees will receive pay reductions while others will benefit from salary increases. We understand that these changes personally impact our employees and we are working closely with them during this transition.

“EDS is an integral part of HP’s long term strategy to provide more services and solutions to our clients.”

[Photo: EDS]

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About the Author, Paul Boutin

Paul (paul@venturebeat.com) covers Apple & the iPhone, social networks & social media, digital music & video, and any crazy Internet story. Paul wrote and edited for Valleywag from 2006-2008, after several years with Wired magazine and Slate. He writes regularly for The New York Times' technology section and sometimes for Wired and The Wall Street Journal. He studied computer science at MIT in the early 1980s, and worked as a software developer and network administrator for 15 years before becoming a professional writer. Follow him on Twitter at @paulboutin, and follow VentureBeat on Twitter at @venturebeat.

  • Wow, that might possibly be the most inaccurate sentence in the history of American reporting on what actually happened to Ross Perot in 1992. Wikipedia has more: http://en.wikipedia.org/wiki/Ross_Perot The 39% you cite was merely his best poll showing.
  • Scott
    People are loosing 50% of their pay and you focus on statistics of Ross Perot from 1992!?! Someone should give you a good butt kickin'.
  • Steve
    The "brash, I-always-win style continued as part of EDS’s professional brand" ....and too bad too because it was (by the time I worked there) terminal arrogance based on past glories. The EDS I knew was bumbling and mediocre at best, archaic, stagnant and very arrogant and unwilling to consider the need for change from command and control management style. Frankly, this HP gutting is just rewards. EDS was a bad company to work for and personally, I am thrilled to hear about these cuts be directed at the jerks I once worked for. They had it coming.
  • johnny_fn
    Steve - unfortunately, it will be the lowest level workers actually out on
    "the assembly line floor" taking the cuts, not the inept managers and senior managers that had the pleasure of supervising you.
  • sunshine135
    It was actually both managers and employees. Still, I would not wish this on my own worst enemy. Bad karma gets repaid, and I have seen a lot of dead weight employees dropped too Steve. You didn't happen to be one of those dead-weights now were ya?
  • GUEST
    Obviously you could not handle hard work. Hope you enjoy working at Wendys'
  • Disappointed, Furious & Poor
    As long as we put up with it, corporations will continue to behave like this toward us little people.

    I for one will not support HP ever again. Not as a consumer, nor as the wife of an HP/EDS employee who lost her job last year via similar corporate tactics at another "World Class Company". Which means, my household has suffered a 70% reduction in income thanks to morally corrupt CEOs and the Corporations that reward them.

    My husband only worked for EDS because EDS acquired the company he was originally working for. Before HP, he thought EDS was a terrible company to work for. I guess he was wrong. My husband will be quitting soon. If he has to start over for less pay, he'd rather do so at a more deserving employer.
  • steve
    Where did you get your "from 10 million to eight" figure from? I think it was an inaccurate statement in another new article that his base pay was $10 million. In fact: Hurd is taking a 20% cut off his base pay, which was $1.45 million last year. However, his total compensation last year was $42 million. His non-base pay compensation is not affected by the pay cut. Please update your column.
  • ScrewedbyEDS
    "some employees will receive pay reductions while others will benefit from salary increases"

    This is not true, they will be reducing pay for employees September 1st, but will not be doing any salary increases till at least November at the earliest, and that time line keeps changing on a weekly basis.