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The Swedish telecom giant, Ericsson plans to slash about 3,000 jobs globally to reduce costs and boost efficiency. The job cuts will be seen in production, sales and administration, research and development functions.
According to the press release by the company, most of the personnel cuts will be made in Sweden and the dismissals will be carried out using a combination of voluntary and forced reductions, as well as other measures such as outsourcing.
About 1,000 employees in Ericsson’s production department, 800 in research and development and around 1,200 personnels in other departments will be facing job cuts. Most of the Ericsson’s employees in Finland will be affected by this move, with some 135 of them working at the company’s plant in Kirkkonummi, and others work in Oulu.
Confirming that the company is going through “a major transformation”, Ericsson’s President and CEO Jan Frykhammar said, “We continue to have a strong focus on R&D, and for many years now already, most of Ericsson’s employees work in software development and services, rather than hardware production. The measures are necessary to secure Ericsson’s long-term competitiveness, as well as technology and services leadership.”
The proposed reductions will impact operations on the following sites in Sweden: Borås, Göteborg, Karlskrona, Kumla, Linköping and Stockholm. Ericsson intends to make significant reductions of operations in Borås and Kumla. The proposed reductions are intended to be met through a combination of voluntary and forced reductions as well as other alternatives such as outsourcing.
Ericsson will also make general cost reductions and take out external costs, primarily by reducing the number of consultants in Sweden by 900, but also through general reductions in operating expenses.
Ericsson has continued to drive change in its global R&D organization to increase efficiency, optimize operations and reduce the number of R&D sites globally. Production in telecom has changed significantly over the past decade with smaller products and a more efficient production – manufacturing time per radio unit has been reduced by more than half.
Higher volatility in production volumes has increased the need for flexibility and using partners has become more important. As a consequence, Ericsson is consolidating its own production to fewer sites globally.
The cost in sales and administration will be reduced as a result of the new company structure introduced July 1, 2016, with the aim to create a more efficient and purpose built organization to meet the needs of different customer segments and more quickly seize business opportunities.
Meanwhile, plans are also underway by the Swedish telecom giant to recruit about 1,000 personnel in R&D in Sweden in the next three years. The recruitment drive will be mainly to recruit graduates from universities to support the company’s competency build up in new technology and customer domains.