Swedish multinational company Ericsson has decided to trim 1,400 jobs in Sweden with larger headcount loss in other countries. Not too long ago, big tech companies were hiring at an alarming rate during the pandemic, expecting greater demand for their tech offering. But in retrospect, that decision has backfired, given the massive layoffs in the past few months.
What triggered this cycle of layoffs?
The pandemic pushed individuals to work remotely, given the norms of social distancing. It was a time when traditional outlets were severely impacted, and a massive transformation led to a digitalisation trend.
This transition resulted in a digital market boom, and companies saw massive incentives to invest in WEB 3.0 projects, Artificial intelligence (AI), 5G and more.
Watch: LinkedIn gains popularity amid mass layoffs
Tech giants such as Google, Facebook and Instagram parent Meta, Twitter, Microsoft and many others thought investing in these new and lucrative technology projects was a good time.
Thousands were hired to fill those lofty ambitions in all these big firms.
But with things returning to normal post the pandemic, several impediments, including the global supply chain crisis, geopolitical conflicts, labour shortage, low demand and surging inflation, caused firms to re-evaluate their stance.
Ericsson’s struggle to sustenance
A magnitude of the latest job cuts at Ericsson comes after the company’s previous experience of restructuring and cost cuts in 2017 when they were fighting to pull the company back from losses towards profitability.
The company plans to cut costs up to $880 million by the end of this year to save it from the hefty blow of slowing global demand, including in North America, a high-margin region.
The share of its 5G equipment hit a low, resulting in lower output in the fourth quarter, fuelling the company’s decision to lower costs. The company has been negotiating with the employee’s’ union in Sweden for months as it devises a plan to cut costs.
The company’s Chief Financial Officer Carl Mellander said the plan is to take up cost-cutting measures by reducing consultants, real estate agents and the overall employee headcount. On this, the union and Ericsson have agreed to reduce the headcount through a voluntary program.
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