Swedish kit vendor Ericsson plans to shed 1,400 staff in its home country as part of its broader cost-cutting drive, the company has confirmed.
According to Telecoms.com, Ericsson said it has reached agreement with trade unions in Sweden on reducing headcount and explained that it aims to do so through a voluntary programme but has yet to provide further details of how that might pan out. Managers will share details of how each business unit is affected by the move with their employees over the coming days.
“Reducing headcount is never easy, and we will manage this with the utmost respect and professionalism,” a spokesperson for the company said, “Further details are always communicated to the relevant staff first.”
The job cuts – which amount to around 10 percent of Ericsson’s domestic employee base – form part of an accelerated bid to reduce costs by 9 billion kronor (just shy of $870m at current exchange rates) by the end of this year, a target the vendor announced at its Capital Markets Day in November. In addition to headcount reduction, the firm also aims to make savings by reducing consultants, streamlining processes, reducing facilities and so forth.
Ericsson’s recent tribulations have been well-documented. It is particularly exposed to the slowing global RAN market, which is having a big impact on its major business: networks. It is ramping up on the enterprise side, having brought Vonage into the fold last summer, but while there is a sizeable addressable market there, the unit’s revenues are a drop in the ocean compared with networks.
Networks accounted for 71 per cent of Ericsson’s SEK271.5bn ($26bn) in revenue in 2022, while Enterprise brought in just SEK15.4 billion, or less than 6 per cent. Admittedly that’s more than double the previous year’s figure, but still not remotely in the same league as Ericsson’s core business.
There is potential in that enterprise play, but it is going to take some time to come to fruition, and investors are twitchy now. Hence, the cost-savings plan and this latest round of job losses.
And there are indications that there could be more to come. Citing two sources close to the situation, Reuters reported that Ericsson will announce further job cuts “numbering several thousands,” in other countries in the coming days.
