On Tuesday, technology company Ericsson AB announced plans to lay off almost 20 percent of its workforce, and in its home country, too.
This announcement is only the first of many steps of a much larger restructuring program that aims to significantly reduce the telecom-network equipment company’s global staff—which is 115,000-strong—explains Ericsson acting chief executive Jan Frykhammar.
Warning that even more cost-cutting measures may be necessary, she goes on to say, “The industry we’re operating in is undergoing a very fast change. If the speed of change in the industry accelerates further, we’ll need more transformation.”
Frykhamamr goes on to say, “We continue to have a strong focus on research and development, and since many years, most Ericsson employees work in software development and services, rather than hardware production.”
He explains that these measures are necessary as a means to ensure the company’s long term competitiveness in a market that continues to expand and diversify.
In addition, though, he also reminds that the company already has plans to hire another 1,000 people in the research and development sector over the course of the next three years, during the company’s “large transformation.”
The company currently has 16,000 workers in Sweden, so the cutback could be significant at home; and it could be anyone since they are making cuts in just about every department: 1,000 positions in production, 800 positions in research and development, and 1,200 positions across sales and administration. Of course, the blow to the Swedish company’s home factories continues to point at increased—and very intense—competition amid slowing handset demand. The total cutback will probably be around 3,000. Furthermore, the company says it is considering cutting about 900 local outside consulting positions, too.
Thus, the company hopes to save 9 billion kronor—the equivalent of roughly $1.05 billion—per year, starting in 2017.
In addition, analyst Sebastien Sztabowicz of Kepler Cheuvreux, in Paris, estimates that the company probably needs to cut approximately 15,000 positions if they are going to meet their target. As such, he explains that “There is more to come [because] We are less than halfway there.”
Also, the company said it is currently in talks with unions over all of the potential job cuts.