BackTelecom giant Ericsson to layoff 8,500 employees amid economic downturn
Ericsson in a memo to its staff said that it would lay off 8,500 employees
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Ericsson, a manufacturer of telecommunications equipment, is set to lay off 8,500 workers worldwide as a cost-cutting measure, according to a memo sent to its employees. Additionally, the company recently disclosed its intention to reduce its workforce in Sweden by around 1,400 positions.
Tech companies have been laying off employees due to economic conditions, but now the telecom industry is facing its largest layoff yet with Ericsson terminating 8,500 employees globally. On Monday, the company announced plans to cut about 1,400 jobs in Sweden.
"The way headcount reductions will be managed will differ depending on the local country practice," Chief Executive Borje Ekholm wrote in the memo, adding, “In several countries, the headcount reductions have already been communicated this week."
The development comes more than a month after the company reported lower-than-expected fourth-quarter core earnings. The sales of 5G equipment have slowed down globally, even in high-margin regions like the United States (US).
The telecom major is planning to reduce its costs by $880 million by the end of 2023 amid a lull in demand for telecom equipment across the globe.
Ericsson has made it clear its intentions to cut costs and reducing the headcount will play a crucial role in such measures. The company's Chief Financial Officer Carl Mellander has earlier told news agency Reuters that the company is planning on cost-cutting measures which will include reducing consultants, real estate, and also employee headcount.
"It's different from geography to geography, some are starting now, and we'll take it unit by unit, considering the labor laws of different countries," Mellander said, referring to the cuts.
The company anticipates that the decline in margin within the Networks sector will continue for the initial six months of 2023, but they predict that the impact of their cost-saving initiatives will become apparent by the end of the second quarter.
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