Oracle chops workforce as lay-offs mount

Oracle made "major" cuts in its global workforce on Friday and more are expected to come, say multiple sources and news reports.

Sales staff and consultants working for Oracle in North America were hit hard, say sources, as well as employees who had joined Oracle recently through its acquisitions of Hyperion Solutions and BEA Systems.

The number of people let go on Friday is unclear. Tim Klasell, an analyst with Thomas Weisel Partners, told Computerworld he thought the layoffs were likely to be in the hundreds or low thousands, rather than the 8,000-figure buzzing about on some blogs and message boards.

Oracle employs 84,000 people globally. An 8,000-employee layoff would amount to about 10 percent of its workforce.

Based on Oracle's history of acquisitions and layoffs, as well as money the company has already publicly said it plans to spend this year on severance, it will likely keep trimming through Spring of 2009.

"I think they're doing this in waves," Klasell said. "It's not great for morale, but you want to make sure you don't cut into the meat."

One Oracle salesperson based in the US said they were called into a meeting Friday and told the news then. More cuts are likely to come, said the salesperson, who asked to remain anonymous.

"They're going to have to. They're not going to sell any [customer relationship management software] in these times," the worker said. "BEA was very bloated and they've got to prune a lot of those people out."

According to a 22 December filing to the SEC, Oracle expects to eventually spend a total of $148 million on severance packages for laid-off employees of BEA, which it bought in January 2008.

While trying to fight off Oracle, BEA changed the terms of its severance in late 2007 so that most employees would receive between 3 months and 12 months of pay and COBRA health insurance if they were laid-off within a year of an acquisition.

Oracle completed its $8.5-billion (approx £5.8 billion) takeover of BEA on April 29 of last year.

Oracle has already spent $38 million on BEA severances, according to its December 22nd filing, as it laid off 275 BEA employees in California, according to state records, and possibly more elsewhere.

Last week, rumours surfaced on an independent site for IBM employees that said the 386,000-employee company would lay off up to 16,000 workers, or 4 percent of its workforce.

Only Microsoft so far appears to have dodged the layoff bullet, though some predict layoffs are coming for it too.

Despite coinciding with the economic downturn, Oracle's layoffs shouldn't be viewed yet as a sign of trouble at the company, says Klasell. Layoffs are a fact of life after mergers, and Oracle had already set aside hundreds of millions of dollars for that. That doesn't make the situation any easier for those people who were laid-off, such as the Oracle salesperson, who plans to go back to school rather than seek another job.

Software salespeople seeking a new job are "looking at 18 months of hell," the ex-employee said.