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Ericsson announces largest layoff in telecom industry amid slow demand
Swedish telecom equipment maker Ericsson has announced that it will lay off 8,500 employees worldwide, according to a memo sent to employees (via Reuters). The decision is part of the company's move to reduce costs by $880 million by the end of 2023. This is the largest layoff in the telecom industry so far and follows similar moves by other tech giants like Google, Meta and Microsoft.
The company cited slow demand across the globe, including North America, as the reason for the decision. On Monday, Ericsson had already announced plans to cut about 1,400 jobs in Sweden. The layoffs will affect various functions and regions within the company.
Borje Ekholm, the CEO of Ericsson, stated in the memo that it is the company's responsibility to reduce costs in order to maintain competitiveness. Ericsson’s Chief Financial Officer Carl Mellander told Reuters that the cost cuts would involve reducing consultants, real estate and employee headcount. He said that the layoffs would vary from geography to geography, depending on the labor laws of different countries. The company said it would provide support and assistance to those affected by the layoffs. It also said it would continue to invest in innovation and growth areas such as 5G, cloud and IoT.
Telecom companies including Ericsson had stocked up on equipment during the pandemic due to increased demands in the IT sector and a push to double down on supporting infrastructure. However, low demand for telecom equipment this year is forced such companies to reduce their spending.
Another major telecom company that is cutting back on its spending is Verizon, which is one of the largest telecom companies in the United States. The company plans to spend between $18.25 billion and $19.25 billion this year, down from a capital expenditure budget of $23 billion last year.
The telecom industry is undergoing a transformation as it shifts to 5G technology and new services such as cloud computing and edge computing. However, it also faces headwinds from geopolitical tensions, competition and regulatory pressures.
How these factors will affect the industry’s outlook remains to be seen.
