Tech Data Lays Off 7 Percent of U.S. Workforce

The layoffs occurred across most departments but were focused in departments such as technical support and customer education--a function the distributor is looking to outsource to third parties.

"We are consolidating our U.S. operations to focus more on what we believe are our core competencies: credit offerings, logistics management, product management, specialized sales and channel marketing," said Lawrence Hamilton, senior vice president of human resources at Tech Data.

The distributor now has about 2,600 employees in the United States and about 8,800 worldwide, Hamilton said. The company had about 2,900 U.S. employees in January but laid off 82 people in February and has lost several positions because of attrition.

The distributor plans to retain some employees in the outsourced departments, but the majority of those operations will be carried out by a multitude of partners across the country, Hamilton said.

Outsourcing operations is a growing trend in distribution, said Bob Anastasi, senior managing director at Raymond James & Associates.

"In a sense, distribution itself is outsourcing of marketing and sales. There are some things that others can do better than you. Tech Data is a bottom-line-driven company and they're willing to make those decisions," Anastasi said.

With fewer employees to house, Tech Data is looking to sell two empty office buildings at its Clearwater headquarters, Tech Data said. The distributor currently uses five buildings there.l

The sagging economy was a principal reason for the layoffs, Hamilton said. "The U.S. market has been price-competitive in a demand-suppressed environment. These moves are designed to increase efficiencies," he said.

The layoffs follow a gloomy outlook by Chairman and CEO Steve Raymund during Tech Data's first-quarter earnings call last month.

"I just don't trust the [rebound] stories I hear. There are too many, and they're too anecdotal," Raymund said at that time. "It was a case of excess capacity chasing too little demand. In [the first quarter], we were slow out of the gate--nothing terrible, but the quarter never really woke up. April is usually soft. Still, we were surprised by the weakness."

Tech Data's stock was at $27.19 per share in afternoon trading, up 1 cent per share.