TD Synnex Starts Layoffs Even After Voluntary Severance Program
‘We’re always adapting our business to ensure we are driving operational efficiency, including evolving services and shifting resources to meet the changing needs of our vendors and customers. Our most recent actions are related to our commitments to achieving merger synergies, but beyond that, we do not comment publicly on specific details,’ a TD Synnex spokesperson tells CRN.
TD Synnex Friday laid off about 100 employees just two months after the IT distribution giant implemented a voluntary severance program, sources told CRN.
Those sources also said that about 300 employees took the voluntary severance package.
The $60 billion distribution powerhouse’s new layoffs impact a wide range of positions including sales reps, vendor business and solutions reps, business development managers, and finance employees, sources told CRN.
A TD Synnex spokesperson, in response to a CRN request for more information, said the layoffs are related to “merger synergies.” That was in reference to the 2021 merger of Tech Data and Synnex, which resulted in what is now known as TD Synnex.
“We’re always adapting our business to ensure we are driving operational efficiency, including evolving services and shifting resources to meet the changing needs of our vendors and customers. Our most recent actions are related to our commitments to achieving merger synergies, but beyond that, we do not comment publicly on specific details,” the spokesperson told CRN.
The latest round of cutbacks comes after TD Synnex in July offered voluntary severance packages to its U.S. employees citing macroeconomic conditions and challenging industry trends.
“This has been driven by the need to reduce our costs due to current macroeconomic conditions, including challenging industry trends (primarily across the PC ecosystem), which you heard me reference in our earnings call last month,” TD Synnex CEO Rich Hume wrote in an internal memo at the time. “The hiring freeze and travel restrictions have helped but have not been enough to get us where we need to be.”
The voluntary severance program from TD Synnex was available to U.S. employees who were at least 58 years of age and had at least five full years of service to the company.
TD Synnex had approximately 23,500 full-time co-workers globally as of August, according to a company press release.
TD Synnex is expected to report third quarter results on September 26.
For its second fiscal quarter 2023, which ended May 31, Tech Data reported operating income of $253 million on a 7.9 percent year-over-year drop in sales to $14.1 billion.
A CEO for a Solution Provider 500 company, who did not want to be identified, said he does not expect the small reduction in force to impact the channel.
In fact, the CEO said, the cuts should be expected given the number of redundant positions that were the result of the Tech Data and Synnex merger.
“I’m not surprised, “ he said. “This kind of cut is inevitable when companies go through a big merger like this. I see this as right-sizing the organization to the correct structure. You have Tech Data and Synnex sales reps and all the support teams and that was on top of Tech Data’s acquisition of Avnet [Technology Solutions]. Do you really need three people chasing the same soccer ball? At some point the business model doesn’t make sense when you are merging unless you get some sort of synergies, whether that be systems, processes or people, and people are your biggest cost.”
Furthermore, the CEO said many companies over-hired during the technology sales boom experienced in the wake of the COVID-19 pandemic. “A lot of companies over-hired during COVID and now that the business isn’t growing at double-digits, they are cutting back,” he said.
The CEO said he still sees a strong IT spending environment with customers continuing to invest in digital transformation. “We still see projects that customers are interested in investing in,” he said. “In some cases customers are delaying transactional purchases to spend money in AI.”