BANGALORE, INDIA: Hewlett-Packard, the world's largest personal-computer maker, is freezing salaries as part of chief executive officer Mark Hurd's efforts to contain costs, people familiar with the plan said. Employees have been notified by e-mail that they won't receive a salary increase in fiscal 2009, which began in November, according to two people who asked not be identified because the message was confidential. The only exceptions will be in countries where pay freezes are illegal, the two people said. 

Hurd has cut jobs, closed offices and merged data centers to lift profit, even as he expands through acquisitions. Hewlett-Packard also is limiting travel, curtailing hiring and eliminating favorite science projects to save on research costs in 2009, chief financial officer Cathie Lesjak said last month on a conference call. Hewlett-Packard, which has 3,20,000 employees, declined to confirm the salary freeze. In this difficult macroeconomic environment, we believe it is prudent and responsible to reduce costs where possible, said spokeswoman Emma McCulloch. HP has a longstanding and disciplined approach to managing costs in order to invest in the company's growth. 

Hurd, who became CEO in 2005, received $25.3 million in total compensation in fiscal 2007. Worldwide technology spending growth will slow to 2.6% next year, less than half the rate initially predicted, research firm IDC said last month. Growth in the US will decelerate to 0.9%, the Framingham, Massachusetts-based company estimated. 

Hewlett-Packard's PC sales, which account for about a third of revenue, rose 10% to $11.2 billion last quarter, beating some estimates. Demand for notebooks offset declining printer sales in a shrinking economy. Last month, Hurd forecast a rise in profit to as much as $4.03 a share this fiscal year, more than the $3.89 anticipated by analysts in a Bloomberg survey. Investors took that as a sign the company is prepared to squeeze more profit out of sales as customers reduce spending. 

It will be a challenging environment and were planning on such, Hurd, 51, said on a November 23 conference call with reporters. We can only control the things we can control, which is our cost structure and the competitiveness of our products.
  
Also in India

A HP employee in Bangalore said that employees in India too had received a mail from the company saying there wouldn't be any salary increase in fiscal 2009. Salary increases in India's technology sector have been amongst the highest in the world in the past few years. If HP does not hike salaries in fiscal 2009, this would be the first time in many years that a major technology company in India would be avoiding a salary increment.

Source: Agencies