The massive job cuts were announced in an internal memo to employees
Ericsson, the Swedish telecoms equipment manufacturer, is planning to cut 8,500 jobs, according to an internal memo to employees that was obtained by Reuters. The drastic measure is intended to help the company cut costs, Reuters said.
The company’s Chief Executive Borje Ekholm wrote in the memo that “the way headcount reductions will be managed will differ depending on local country practice”. He added that “in several countries the headcount reductions have already been communicated this week.” While Ekholm did not disclose which geography would be most affected, analysts predict that North America would likely be the hardest hit area, whereas growing markets such as India would be least affected.
The move follows a previous announcement by Ericsson that they planned to cut 1,400 jobs in Sweden alone.
Ericsson’s lay-offs are the highest in the telecoms sector
Technology companies such as Microsoft, Alphabet, Salesforce and Meta have recently laid off thousands of their own employees, often citing economic conditions, and sometimes in response to the demands made by activist investors. Ericsson’s move, however, would be the largest layoff to hit the telecoms sector thus far. The company employs more than 105,000 worldwide.
In December, Ericsson said it would cut costs by 9 billion crowns (€817 million) by the end of 2023 as demand slows in some markets, including North America. The cost-cutting measures were in response to investor demands that Ericsson “drain the swamp” of losses.
A reaction to a slowdown in orders
“It is our obligation to take this cost out to remain competitive,” Ekholm said in the memo. “Our biggest enemy right now may be complacency.” The COVID pandemic had led many telecom companies to increase their inventories. This has now caused orders for telecom equipment makers like Ericsson to slow. Carl Mellander, Ericsson’s Chief Financial Officer, had earlier told Reuters that cost cuts would involve reducing consultants, real estate and employee headcount.
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