Downsizing Trend
Major foreign information technology (IT) companies in Korea showed a significant reduction in their work forces last year.
Hewlett-Packard (HP Korea’s work force stood at 654 as of April this year, according to corporate information provider Credit Job. This is a decrease of 105 people compared to the same period of last year (759 people) and means that their workers slipped 13.8% in one year. HP Korea was divided into Hewlett Packard Enterprise (HPE) and HP Korea in November 2015. The total number of HP Korea employees in Korea is the number of employees of HPE, engaging in the server and software business. Considering that the change in HPE's number of employees was made in one year, the drop in the number of employees was stemmed not from employees’ moves to HPE, a company that was spun off, but from the massive resignation of HPE employees.
According to the Financial Supervisory Service, Intel Korea spent 4,064 million won in severance pays to employees last year. This is a 37.9 percent increase from last year's 2,964 million won. The surge in retirement benefits among sales and administrative expenses means a significant decline in the number of workers in the previous year. Actual salaries and bonuses shrank by 4.3 billion won to KRW33.3 billion in 2016 from KRW37.6 billion won in 2015.
The number of IBM Korea employees also dipped 8.94% to 1,639 from 1,800 in 2016. Salaries paid during the same period also dropped from 155.3 billion won to 144.2 billion won. It is said that the drop in the number of IBM Korea employees has been influenced by a business restructuring initiated by the IBM headquarters. IBM’s global IGF (global financing) began, resulting in the spin-off of IGF from IBM Korea in October of last year..
A big drop in the number of employees at the Korean corporations of global IT companies is blamed for the sluggish Korean IT market as well as downsizing policies implemented by global headquarters. Analysis says that the HP headquarters’ withdrawal from various business projects and changes in HP’s business divisions had an impact on employees’ resignation from HP
In fact, HP acquired EDS, an IT services company for US$ 13.9 billion in May 2008. The acquisition led HP Korea took over EDS Korea in Korea in August 2009 and HP Korea engaged in offering IT services. But according to the industry, HP Korea is not offering the IT services in Korea anymore. Also, in the security business, HP sold HP Tippingpoint to Trend Micro in 2015, withdrawing from the security business. "HP gave up the IT services in the Korean market,” an industry representative said.
A slump in the PC market slashed Intel Korea’s work force in Korea. The global PC market has been shrinking for years. According to market researcher Gartner, worldwide PC shipments in the first quarter of 2017 declined 2.4 percent year-on-year to 62.2 million units. The world PC market reached less than 63 million units last year for the first time since 2007. PC semiconductors are still a big cash cow for Intel.
In particular, some analysts say that the decline in the number of employees of foreign IT players in Korea is attributable to their small shares of the Korean market. Also, the Korean market’s roles as an IT test bed like those in the early 2000s have weakened. "Many Korean corporations of foreign IT giants account for 1% to 2% of their total global sales," said an official of the IT industry.