DXC Technology

DXC Technology, formed from the 2017 merger of CSC and Hewlett Packard Enterprise Services, was an IT services company with approximately $17.7 billion in revenue (FY2021) and over 130,000 employees globally. The post-merger integration had left DXC with a bloated cost structure: duplicated corporate functions from two legacy companies, an oversized real estate footprint with hundreds of facilities worldwide, a contractor workforce that was expensive relative to full-time employees, and an inefficient network and telecommunications infrastructure inherited from the merger. SG&A and overhead costs were well above peer benchmarks as a percentage of revenue, and the company was losing share in a competitive market while simultaneously overspending on general operations. Operating margins were thin and free cash flow had been negative ($-648 million in FY2021), signaling a company burning cash on overhead rather than generating returns.

CEO Mike Salvino, who joined in September 2019, launched a cost reduction program targeting $500 million in savings across multiple G&A categories:

• Staff optimization and offshoring: Increased the ratio of offshore to onshore employees by moving work to lower-cost delivery centers in India, Romania, Bulgaria, and the Philippines. This was not simply layoffs but a deliberate restructuring of where work was performed, with full-time employees in low-cost locations replacing expensive contractors and onshore staff in high-cost markets.
• Contractor conversion: Systematically converted expensive contractor positions to full-time employees (FTEs), reducing the per-person cost while improving knowledge retention and delivery consistency. DXC had inherited an unusually high contractor mix from the merger.
• Real estate consolidation: Closed and consolidated offices and data centers across the global footprint, reducing the number of facilities and total square footage. With the shift to hybrid work, many facilities were underutilized and represented pure overhead.
• Network and telecommunications rationalization: Consolidated legacy network infrastructure from two pre-merger companies onto a unified platform, eliminating redundant circuits, contracts, and management overhead.
• Third-party spend optimization: Renegotiated hardware and software vendor contracts, consolidated procurement across business units, and eliminated redundant third-party tools and services that had accumulated from the merger.