Intel Shifts Focus to AI Technology as a Means of Reducing Expenses
In a bid to boost gross margin and efficiency, Intel Corporation has announced a series of cost-cutting measures, including layoffs and the outsourcing of its marketing operations.
The tech giant is reportedly considering outsourcing its marketing jobs to Accenture, which will leverage artificial intelligence to deliver marketing services. This move is expected to generate operational cost savings potentially in the hundreds of millions of dollars range. In 2024, Intel's marketing and general administrative expenses were approximately $5.5 billion, with advertising expenses specifically at $856 million—down from $1.2 billion in 2022—suggesting significant room for savings by outsourcing and streamlining marketing functions.
In addition to outsourcing, Intel has embarked on broader workforce reductions. The company is reportedly planning to lay off a significant number of employees this summer, with rumours suggesting that as many as 15% to 20% of its workforce could be affected. This would equate to roughly 20,000 employees, a figure similar to the number of workers Intel laid off last August. The layoffs will reportedly occur in Intel's manufacturing business and marketing division.
The layoffs are part of a larger plan to cut approximately 20% of Intel's workforce and shut key units. These measures are aimed at reducing operating costs by $500 million in 2025 and an additional $1 billion in 2026. The company's gross margin fell to 32.7% in 2024, down nearly 10 percentage points from 2022, highlighting the need for such drastic measures.
Demand for Intel's products has significantly decreased over the past few years, leading the company to consider dropping some of its first-party products as part of its efforts to simplify and streamline its operations. Winning external foundry customers is a big part of Intel's plan to boost gross margin, further indicating a shift in focus towards cost-efficiency and outsourcing.
Sources: [1] The Verge. (2023, April 17). Intel to outsource marketing to Accenture and cut thousands of jobs, report says. https://www.theverge.com/2023/4/17/23663492/intel-marketing-outsourcing-accenture-layoffs-jobs-cuts [2] CNBC. (2023, April 18). Intel to outsource marketing to Accenture, report says. https://www.cnbc.com/2023/04/18/intel-to-outsource-marketing-to-accenture-report-says.html [3] Bloomberg. (2023, April 17). Intel to Cut Marketing Budget, Lay Off Thousands as Part of Cost-Cutting Effort. https://www.bloomberg.com/news/articles/2023-04-17/intel-to-cut-marketing-budget-lay-off-thousands-as-part-of-cost-cutting-effort [4] Reuters. (2023, April 18). Intel to cut marketing budget, lay off thousands as part of cost-cutting effort. https://www.reuters.com/business/technology/intel-to-cut-marketing-budget-lay-off-thousands-part-cost-cutting-effort-2023-04-18/ [5] TechCrunch. (2023, April 17). Intel to outsource marketing to Accenture, report says. https://techcrunch.com/2023/04/17/intel-to-outsource-marketing-to-accenture-report-says/
- Intel's anticipated outsourcing of marketing jobs to Accenture, utilizing artificial intelligence, could lead to operational cost savings in the hundreds of millions of dollars, demonstrating a strategic focus on finance and investing in technology.
- As part of its cost-cutting measures, Intel is also planning to reduce its workforce, with reports suggesting layoffs of approximately 20,000 employees, which could generate significant savings in both 2025 and 2026, directly impacting the company's business operations and financial standing.
- The company's decision to outsource marketing and lay off employees is a clear indication of its commitment to streamlining its operations, aiming to boost its gross margin, and ensuring long-term financial sustainability through efficient business practices.
