Ericsson to lay off 8,500 employees as part of cost cutting plan

After warning in January that profit margins at its RAN business would worsen, telecom equipment maker Ericsson will lay off 8,500 employees globally as part of its plan to cut costs, according to a  memo sent to employees and seen by Reuters.

“The way headcount reductions will be managed will differ depending on local country practice,” Chief Executive Borje Ekholm wrote in the memo. “In several countries the headcount reductions have already been communicated this week,” he said.  “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.”

While technology companies such as Microsoft, Meta and Alphabet have laid off thousands of employees citing economic conditions, Ericsson’s move would be the largest layoff to hit the telecoms industry.

On Monday, the company, which employs more than 105,000 worldwide, announced plans to cut about 1,400 jobs in Sweden.  While Ericsson did not disclose which geography would be most affected, analysts had predicted that North America would likely be most affected and growing markets such as India the least.

The company said in December it would cut costs by 9 billion crowns ($880 million) by the end of 2023 as demand slows.

“Our aim is to manage the process in every country with fairness, respect, professionalism and in line with local labor legislation,” Ericsson said in a statement.

“We are also working on our service delivery, supply, real estate and IT. We have already started to implement and accelerate various initiatives to help us reach” the cost-cutting goal, Ericsson said.

Many telecom companies had beefed up their inventories during the height of the pandemic which is now leading to slowing orders for telecom equipment makers like Ericsson and Nokia.


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One thought on “Ericsson to lay off 8,500 employees as part of cost cutting plan

  1. From Mike Dano of Light Reading:

    Niklas Heuveldop, the head of Ericsson’s North American business, said he’s preparing to cut 5-7% of his company’s workforce in the area. The cuts are part of Ericsson’s global round of layoffs that will see a total of 8,500 employees leave the company.

    Ericsson employs roughly 105,000 people across the world, and 12,000 of those are in North America. In the US specifically, Ericsson counts 9,000 employees.

    “I think the leadership has been wise about keeping a tight ship,” Heuveldop told Light Reading, arguing that the company’s current round of layoffs are relatively light, given the slowdown in operator spending. He attributed the situation to Ericsson’s moderate rate of growth while supporting early 5G demand. “We’re coming off an exceptional period of acceleration,” he said.

    Ericsson’s Networks division is the company’s biggest, and North America is the company’s biggest region by sales. Heuveldop said AT&T, Verizon and T-Mobile in the US have all been furiously buying Ericsson equipment (alongside equipment from the likes of Samsung and Nokia) to add midband spectrum to their 5G networks. Now, he said, that spending is slowing as the operators finish their early network buildout efforts.

    However, “we’re not done yet,” Heuveldop said.

    Heuveldop argued that Ericsson expects mobile traffic volumes to grow 4x through 2028, and he said operators will need to further invest in their networks to keep pace with that growth. Additionally, he pointed to the new fixed wireless offerings from T-Mobile and Verizon as another catalyst for growth.

    Specifically, he said that network operators throughout North America will continue to purchase Ericsson equipment to expand their 5G networks into rural areas, and to then reinforce those networks with small cells and indoor networking equipment.

    But big mobile network operators aren’t Ericsson’s only potential customers. The company is also pursuing enterprise customers through the sale of private wireless networking equipment, an effort underscored by Ericsson’s recent $1.1 billion purchase of Cradlepoint.

    “We see a lot of enterprises ‘cutting the cord,'” Heuveldop said. He said such customers are shifting all of their operations onto 5G, essentially removing the need for wired enterprise connections.

    However, Heuveldop said enterprise equipment suppliers – those that build robots, sensors, manufacturing machinery and mixed reality devices – need to support 5G more broadly. “The device ecosystem is not where it needs to be,” he said. “We need the ecosystem to start maturing.”

    Finally, Heuveldop nodded to the GSMA’s new “Open Gateway” initiative, under which more than a dozen big mobile network operators around the globe are pledging to develop standardized application programming interfaces (APIs) into their respective networks. He described that announcement as a “breakthrough” because it could position operators (Ericsson’s main customers) to develop new ways to make more money.

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