The European heavyweight of telecom equipment manufacturers, Ericsson, is not spared by the crisis and is preparing to thank 8,500 people, or nearly one in ten employees.
The wave of layoffs that has affected the Tech sector for several months continues to grow and is now heading into the telecoms sector. According to a note sent to Ericsson employees and consulted by our colleagues at Reuters, the Swedish company is preparing to lay off 8,500 of its 100,000 employees worldwide, or nearly 10% of its total workforce. The equipment manufacturer evokes a cost reduction plan.
Ericsson dismisses thousands of employees after a difficult year 2022
Ericsson has had a complicated 2022. Its net profit has plunged by 17% and the company is looking for better profitability, to remain competitive. This prospect prompted the company to set up a vast savings plan of 820 million euros, to be raised before the end of the year.
Part of the savings will be the result, as we now know, of the 8,500 layoffs announced to employees at the end of the week. The majority of these job cuts will be effective in the first half of the year, before management launches a second wave of layoffs in 2024.
The news will come as no surprise to employees. Some had already prepared for it since the group’s unions had confirmed, during the week, the management’s desire to part with 10% of the employees (about 1,400 people) on site, in Sweden. But ultimately, it is the workforce of the group as a whole that is affected.
A company that has lost half its value in one year
These 8,500 announced layoffs are intended to make “ more efficient a company that is one of the world’s three leading telecom equipment manufacturers. Nokia, its illustrious European competitor, had already announced, in 2021, the elimination of 10,000 employees over two years, officially for ” invest in future capabilities “, while the two European companies had been able to recover certain 5G markets abandoned by Huawei, shunned by Western powers after the American sanctions.
Ericsson today is impacted by the downturn in the global economy and has suffered the consequences of disrupted supply chains. Over one year, the firm has lost more than half of its value, failing to restore confidence to its investors, especially since the leaders are expecting another difficult year.
In theory, North America should be the main victim of this savings plan. The company suffers there more than elsewhere and especially more than in India, which, conversely, represents a growing market. Tech has been hit by mass layoffs for several months. In addition to Google, Amazon, Meta (which could even announce a second wave of layoffs) or Microsoft, there are also well-known names in new technologies, such as Dell or Yahoo, which will also cut thousands of jobs.
Source : Reuters
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