The move is part of a major cost-cutting plan that could include additional layoffs elsewhere.
Ericsson, the Swedish telecoms manufacturer, plans to cut around 1,400 jobs in Sweden, according to a report in Reuters. The move is part of a broader plan to reduce costs globally, the company said. The announcement indicates telecoms providers are joining the “tech job rout” that has afflicted software providers such as Salesforce.
The telecom giant had earlier announced plans to cut costs by 9 billion crowns (€817 million) by the end of 2023. This was needed, they explained, to address slowing demand in some markets, such as North America. In fact, last month Ericsson missed expectations for its fourth-quarter earnings and warned reduced spending from customers in the US and other developed markets was impacting its profitability.
The cost-cutting campaign is no doubt also a response to calls from activist investors last fall to “drain the swamp of losses” and reduce overall operating costs. Indeed, a major shareholder, Cevian Capital, has been very aggressive in repeatedly calling for the telecom giant to cut expenses.
Insiders told Reuters that further job cuts in other countries are likely to be announced in the coming days. These cuts, they said, could number in the “several thousands”.
First manpower cuts in 5 years
Ericsson last made deep cuts in 2017 when it laid off thousands of employees and focused on research to pull the company out of losses. The focus on R&D was reflected in Ericsson’s suing Apple in 2021 over patent infringement, in which Ericsson claimed Apple was using its 5G technology without permission.
An agreement has now been reached with Swedish unions on how to manage headcount reductions, a spokesperson told Reuters. The company had been negotiating with the union for months on how to handle cost cuts, and the company now intends to make the cuts through a voluntary programme.