Ericsson announced its plan to cut costs by around $880 million by the end of 2023 due to slow demand across the globe, including in North America.
The company has been negotiating with the employees' union in Sweden for months on how to handle the cost cuts.
The parties have reportedly reached an agreement on reducing the headcount, and the company is planning to implement job cuts through a voluntary program.
The choice was made one month after Ericsson revealed lower-than-anticipated core earnings for the fourth quarter.
The sale of 5G equipment slowed worldwide, particularly in high-margin markets like the United States, and the telecom company's shares fell to new lows (US).
According to those with knowledge of the announcement, several thousand job cuts may be announced in various nations over the next few days.
This magnitude of layoffs at Ericsson is occurring after almost six years, as the company laid off thousands of employees and focused on research to pull the company back from losses in 2017.
Ericsson is slated to be the latest entrant in the streak of layoffs, as the telecom gear maker plans to cut around 1,400 jobs in Sweden and more in other countries. The business has described the layoffs as a component of a larger global cost-cutting strategy..
The 1,400 layoffs have been announced in the company's home country Sweden as of now, amounting to around 10 percent of Ericsson’s domestic employee base.
Reportedly, Ericsson has been negotiating with its employee union in Sweden for months on how to handle cost cuts. A spokesperson has stated that an agreement has now been reached with Swedish unions on how to manage headcount reductions.
A company spokesperson told telecoms that while headcount reductions are never simple, they will be handled with the utmost professionalism.. He further added that details would always be communicated to the relevant staff first.
According to the company's chief financial officer, Carl Mellander, cost-cutting measures are being planned, including a reduction in the number of consultants, properties, and employees. "From geography to geography, it differs.
Some have already begun, and we'll proceed unit by unit while taking into account the various countries' labour laws "Mellander mentioned the cuts in his statement.
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