Ericsson Reveals Layoffs in Sweden, More Planned

October 4th, 2016 by · Leave a Comment

The quarters ahead are looking lean for those working at the biggest vendors out there. The Scandinavian giant Ericsson detailed plans today to reduce its workforce in its home turf of Sweden by some 3,000 employees as well as 900 consultants.

The vendor’s last remaining manufacturing sites in Sweden in Boraas and Kumla will bear the brunt of the layoffs, with some 1,000 people affected. There will be reductions in sales, administration, and R&D as well. Ericsson employs 16,000 people in Sweden, meaning just under 20% will face the axe — not a minor number. In order to reach its cost savings goals of over $1B annually, a similar percentage reduction will likely be required from its non-Swedish markets.

Softening the blow slightly, Ericsson suggested that over the next 3 years it will be hiring some 1,000 for software-related R&D projects focused on 5G and other new technologies. There is definitely a trend toward software and away from specialized hardware going on.

Sales have been light and competition has been high, and Ericsson’s management team has been under pressure to make some changes. They aren’t the only ones of course. Cisco revealed plans in August for similar cost savings that will likely affect some 5,500 over the next few quarters as well.

Vendors are highly sensitive to shifts in the economy, and it certainly feels like such a shift is underway. The big carriers are becoming more cautious with their capex, and political uncertainty surely isn’t helping.  Some of Ericsson’s problems are surely of their own making, but some of them aren’t.

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