Swedish Telecom Company Ericsson Cuts 8,500 Jobs as Part of Plan to Save $860 Million

Swedish telecom equipment maker Ericsson is cutting as many 8,500 employees worldwide, as part of a $860 million cost-saving plan. Ericsson's disappointing full-year results for 2022 as well as gloomy global macroeconomic conditions contributed to the drastic cost-cutting plan, according to reports.

"Reducing headcount is never easy, and we will manage this with the utmost respect and professionalism. Further details are always communicated to the relevant staff first ... The cost savings cover various areas such as reduction of consultants, streamlining of processes, reduced facilities, etc. As previously announced, it will also include head-count reduction," Ericsson said in a statement.

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Structural Costs

The Swedish company has already informed the employees affected by the headcount reduction plan, Bloomberg reported. "We see a potential to simplify and become more efficient throughout the company, especially when it comes to structural costs," an Ericsson spokesperson said, the agency added.

As of the end of 2022, Ericsson had 105,000 employees on its rolls worldwide. The latest job cut follows the decision to lay off 1,400 employees in Sweden. The current round of job cuts will affect more than 10 percent of Ericsson's global workforce.

Ericsson to cut up to 4,000 jobs; one-fifth of Swedish workforce in firing line
A general view shows an office of Swedish telecom giant Ericsson in Lund, Sweden, September 18, 2014 Reuters

Other Recent Job Cuts

On Friday, Germany's BASF, the world's largest chemicals group, said it was cutting as many as 2,600 jobs. The chemicals giant is facing headwinds even as Germany is on the cusp of a recession following an unprecedented energy crisis that happened in the aftermath of the Ukraine war.

Earlier this week, Global consulting giant McKinsey & Co said it was planning to cut as many as 2,000 jobs, as it focuses on restructuring the organization and cutting the flab in the support roles. The job cuts will not affect employees who are in client-facing roles, reports said. McKinsey also confirmed that it is still hiring professionals for roles that directly deal with clients.

Also this week, Chinese telecom equipment giant ZTE was reported to be laying off an unspecified number of people across departments and verticals. ,A China Star Market report said some departments are laying off as much as 20 percent of the employees. "Some departments of the Wireless Research Institute are laying off 10-20 per cent of their staff. In addition, the terminal business department is also the focus of the layoffs," the report said.

Last week, Walt Disney Co said it would lay off 7,000 employees as it tries to trim costs amid souring economic conditions. The job cuts, announced by CEO Bob Iger, aims to save $5.5 billion in costs for the entertainment giant. Disney has as many as 190,000 people on its rolls as of 2021 annual report, and the current round of layoff means 3.6 percent of Disney's global workforce will leave the company.

Earlier in February, Dell Technologies said that it will lay off about 6,650 workers globally, becoming the latest technology company to do so. The cuts will include 5 per cent of the company's global workforce, reports Bloomberg, citing sources. "The company is experiencing market conditions that continue to erode with an uncertain future," Co-Chief Operating Officer Jeff Clarke, was quoted as saying.

At the end of January, European software giant SAP joined the parade of tech companies laying off staff, announcing that it was cutting about 2,900 jobs after the iconic US tech company IBM said it was slashing about 3,900 jobs. These numbers add to the 150,000 jobs cut last year and about 30 per cent of that number that was reported by ComputerWorld. SAP said that the jobs cut would be about 2.5 per cent of its workforce of about 112,000.

Also in January, US carmaker Ford Motor said it was trimming as many as 3,200 jobs across Europe. The carmaker will also move some product development jobs back to the United States, reports say, even as thousands of jobs in industries spanning technology, retail and finance have been lost in the last several months.

On January 21, Google parent Alphabet Inc said it was cutting about 12,000 jobs as it faces "a different economic reality'. The job cuts affect 6% of its workforce, and follows thousands of layoffs at tech giants including Amazon.com Inc, Microsoft Corp and Meta Platforms Inc who are downsizing after a pandemic-led hiring spree left them flabby in a weak economy.

Days earlier, Microsoft's decision to go for a massive job cut was reported. The tech giant was laying off as many as 11,000 people across many divisions, reports said. The job cuts to be announced shortly would amount to 5 percent of the workforce of around 220,000 employees, Sky News reported. According to Bloomberg News, the job cuts would mostly affect a number of engineering divisions. It also says that the current round of job cuts will be significantly larger than earlier layoffs announced by Microsoft.

In early January, it was reported that Goldman Sachs Group was cutting as many as 3,000 jobs as it assesses that the economic conditions are tightening. As of now, the investment banking giant has nearly 50,000 employees. The bank had added several thousands of employees during the pandemic when deals and acquisitions boomed.

Days earlier, Amazon said it was cutting as many as 18,000 jobs as the economic outlook has become bleak. In November, it was reported that the e-commerce giant would eliminate 10,000 jobs. "Between the reductions we made in November and the ones we're sharing today, we plan to eliminate just over 18,000 roles," CEO Andy Jassy said in a statement to his staff. Amazon shares rose more than 2 percent after the announcement. The latest round of the jobcuts would mostly affect the technology and human resources divisions of the company. In total, Amazon has around 300,000 corporate personnel. However, its total staff strength including store workers stand at 1.5 million.