Ericsson has joined the growing number of tech companies cutting the size of their workforce, as economic headwinds tighten its grip on the tech industry.
The telecom equipment maker said in a memo it plans to lay off 8,500 employees globally in a bid to cut costs.
“The way headcount reductions will be managed will differ depending on local country practice,” Chief Executive Borje Ekholm wrote in the memo.
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“In several countries the headcount reductions have already been communicated this week,” he added.
Ericsson joins other tech companies like Microsoft, Meta, Alphabet and Twitter that have reduced headcount as the covid-induced economic boom dies down. The share of its 5G equipment dropped significantly, cutting the company’s output to a low in the fourth quarter.
The Swedish company’s move would be the largest layoff to hit the telecoms industry.
Ericsson has a workforce of more than 105,000 employees worldwide, and has been negotiating with workers union in Sweden to cut about 1,400 jobs as part of its broader plan to reduce its global headcount.
The company’s Chief Financial Officer, Carl Mellander, said the cost-cutting plan will include reducing consultants, real estate agents and the overall employee headcount. On Monday, Ericsson announced a decision to lay off some employees in Sweden through a voluntary program, after reaching an agreement with the workers union.
Though Ericsson did not say which region the cuts will impact most, analysts predicted that it will likely be places where sales have been poor – pointing at India and North America. The company had in December disclosed that it would cut costs by 9 billion crowns ($880 million) by the end of 2023 as demand slows in some markets, including North America, per Reuters.
“It is our obligation to take this cost out to remain competitive,” Ekholm said in the memo. “Our biggest enemy right now may be complacency.”
The pandemic-induced economic boom inspired an increase in sales, which saw orders for telecom equipment go up. But the telecom industry has seen a significant decline as the pandemic wanes. The resulting economic downturn has forced many telecom companies to consider cutting costs including reducing their headcount.
Verizon, one of the largest telecom companies, plans to spend between $18.25 billion and $19.25 billion this year, about $5 billion cut from the $23 billion budget it spent last year.
This is not the first time Ericsson will trim its workforce as part of its measures to cut costs. In 2015, the company initiated a similar plan to cut 2,200 jobs, a move aimed at saving the telecom giant about $1.08 billion by 2017.