Ericsson may cut 25,000 employees as part of its $1.2 billion cost savings plan according to unidentified sources that spoke to the Swedish daily newspaper, Svenska Dagbladet. These cuts will impact employees outside Sweden. According to its website, Ericsson employs 109,000 people worldwide.
According to the report, Ericsson is in the midst of reviewing its business and identifying areas where it can cut costs. The article also said the company may reduce its operations in some markets by as much as 80 to 90 percent.
Ericsson said in July that it would have to accelerate its cost efficiency program in order to achieve a $1.2 billion annual run rate by mid-2018. At the time, CEO Borje Ekholm said the company would reduce service delivery costs and other costs like real estate and IT without dipping into R&D, which Ericsson still considers a necessity.
In a statement on Ericsson’s web site in response to the article, it said the company “has not communicated which specific units or countries that could be affected. It is too early to talk about specific measures or exclude any country. As Ericsson executes on these plans to save costs, the company will communicate this, and to what extent employees could be affected.”
Ericsson has been struggling lately as service providers have reduced their spending on 4G and not yet ramped up spending for 5G. The company is also feeling pressure from Chinese vendor Huawei and from Nokia, which has been making headway in developed markets thanks to its recent acquisition of Alcatel Lucent.