Ericsson to axe 8% of its workforce; 8,500 employees affected
After the tech industry, it is now the telecom sector's turn to be hit by layoffs. Swedish 5G networks maker Ericsson has announced that it will reduce its global headcount by 8,500 in a bid to cut costs. The move will affect roughly 8% of its workforce, and North American employees are likely to be hit the most.
Why does this story matter?
The post-pandemic economic meltdown is sparing no one. Now, Ericsson is set to embark on a layoff drive as it stares at a slowing demand in certain strategic markets. This would be the largest headcount reduction to hit the telecoms industry. To bring down its expenses, the firm might also reduce the number of consultants, and real estate it owns.
Why is Ericsson on a firing spree?
Ericsson embarked on a hiring spree during the COVID-19 pandemic but now the times have changed. Also, during then, several telecom companies heavily increased their inventory which has resulted in fewer orders for the Swedish telecom equipment maker now. All of these, coupled with lower-than-expected fourth-quarter core earnings last month, have prompted the firm to let go of employees.
Indians are least likely to lose jobs
Ericsson, which employs over 1,05,000 people worldwide, will axe around 1,400 jobs in Sweden. Also, North American workers are at a high risk of losing their jobs, while India is the least. The layoffs are part of an $880 million cost-saving plan by the firm, and most of them will be done in the first half of 2023. The rest will be in 2024.
'Need to reduce structural costs to become more efficient'
In a memo to the employees, Ericsson said, "We see a potential to simplify and become more efficient throughout the company, especially when it comes to structural costs." It also claimed that it was its obligation "to take this cost out to remain competitive" and that currently, its biggest enemy might be "complacency." The Swedish firm has been planning this move since 2022.
Rival Nokia is yet to fire employees
Ericsson's Finnish rival Nokia is yet to announce any layoffs, but any such move cannot be ruled out in the coming days. Meanwhile, the tech industry which comprises giants like Meta, Twitter, Google, Intel, and IBM, is letting go of employees at an unprecedented pace.
