What’s going on:
Ericsson, the telecommunications equipment company (and one of the world’s biggest providers of 5G mobile networks), is slashing 8,500 positions from its staff in a bid to cut costs — joining the ranks of other corporations who have taken similar action as economic uncertainty looms.
Why it matters:
With its global workforce of approximately 106,000, the company is looking to cut costs by $880 million by the end of 2023, which has led to a round of layoffs affecting 8% of its staff. This includes the 1,400 positions previously announced this week in Sweden, where Ericsson is headquartered.
Analysts had speculated that North America would be the most adversely impacted by Ericsson’s plans, whereas growing markets like India would experience the least impact.
“It is our obligation to take this cost out to remain competitive. Our biggest enemy right now may be complacency,” Chief Executive Borje Ekholm said.
How it’ll impact the future:
At the peak of the pandemic, many telecom companies amped up their inventories, causing a decline in demand for telecom equipment makers.
Ericsson recently released lower-than-anticipated fourth-quarter core earnings, citing slower 5G equipment sales in major markets such as the United States. Big Tech has announced thousands of layoffs in the past few weeks, which is a drastic reversal from their hiring spree during the pandemic.
Ericsson CFO Carl Mellander previously announced that to cut costs, they would be reducing consultants, real estate, and personnel.