Can Dell Avoid the Layoff Bomb?

Dell Computer has been suffering slow sales and stubbornly high costs, and now the company may be considering a "reduction in workforce," according to the feature article from today's BusinessWeek. But there are other, less painful ways to improve operational efficiency.

Since revenue-per-employee is the figure most analysts look at to assess operational efficiency, there are two ways to make the situation better: (a) cut employees or (b) boost revenue. Which sounds more appealing? Many executives think it's easier just to lay people off -- though that's certainly difficult as well. In the long run, however, the damage done to employee morale and social equity may represent a real cost.

Dell may have an alternative, and it's called Asia. If the company can compete in China, they may be able to go boost revenues and avoid layoffs by generating enough revenue to bring the revenue per employee figure up to snuff. The "if" is not purely theoretical: Dell's shipments to China increased 33 percent year-on-year, and last quarter's shipments went up by 37 percent. HP, Dell's number one competitor, is now looking at the Asia Pacific region as their fastest-growing market, with year-on-year revenue growth of 15 percent. So the real question is: With Michael Dell himself back in the chief spot, will Dell be able to hit its numbers without dropping the layoff bomb? Stay tuned.

(Photo of Michael Dell by Charlie Brewer, CC 2.0)