Chinese telecom giant Huawei Technologies Co has cut its India revenue target by 50 percent and will reportedly be laying off more than half of its workforce over the coming weeks. The news comes amid falling demand for its equipment and services following growing border hostilities between India and China.
Several Chinese companies have been facing severe backlash in India amid calls to boycott Chinese goods and services. Huawei has a major presence in India. However, the company has also drawn global ire following allegations made by the United States that China may be using Huawei to spy on the country. India also echos similar sentiments now.
Feeling The Pinch of Border Hostilities
Huawei reportedly has cut its India revenue target by half for the fiscal year 2020 and will lay off 60 to 70 percent of its total workforce over the coming weeks. The Chinese telecom equipment major is now expecting revenues between $350 and $500 million for 2020 compared to the roughly $700 to $800 million projected earlier.
The job cuts will be across all departments excluding those in research and development and the global service center, according to an Economic Times report. Huawei has around 700 employees on its rolls in India and employs hundreds through third-party firms. Most of these jobs with third-party firms will be done away with, while few more hundreds on its rolls will also be asked to part with the company.
Most of the jobs impacted will be in the network support, field deployment, outsourcing, and sales department as there are no new projects or any clarity on new business from telecom operators given that Indian companies have been ordered by the government to use locally-made equipment instead of Chinese products. Huawei, however, has not made any official announcement yet.
Huawei's India Dreams Shattering
Huawei's move comes at a time when the company struggles with declining demand for its equipment and services in India amid growing anti-China sentiment in the country following the killing of 20 Indian soldiers by Chinese forces in a border dispute in June. The Indian government has also ordered two state-run telecom firms to use locally-made telecom equipment instead of Chinese products to upgrade their mobile networks to 4G.
The decision to cut the revenue forecast is clearly based on the uncertainty around receiving any big projects in India anytime soon. This is also an indication for Huawei that India now wants to refrain from allowing Chinese firms to get into partnership with Indian companies, which comes as a major blow to its dreams of getting a strong foothold in Asia's third-largest economy.
India has also joined forces with the United States and the UK in raising security concerns over Huawei's links to the Chinese government that may now put a question on the company's survival in India.
Recently, ZTE slashed its workforce by nearly 30 percent to nearly 600 heads due to declining business in India as telecom operators have cut down on expenditure. Huawei might just end up being one of the many Chinese companies that will now find it difficult to find business in India.