SWEDISH TELECOMS equipment maker Ericsson is laying off nearly 10 percent of its workforce, with around 1,500 jobs to be cut.
The layoffs will affect employees in every one of the company's Swedish divisions. Ericsson head of human relations in Sweden, Tomas Qvist said the job cuts were being made to promote Ericsson's future competitiveness in the market.
"It is naturally a difficult message for our employees in Sweden. [But] we must ensure that we can continue to execute on our strategy to maintain our market leadership, invest in R&D and meet our customers' needs. To secure this we need to focus on reducing cost, driving commercial excellence and operational effectiveness," said Qvist.
"This will enable us to secure our future competitiveness. Over the past couple of years we have been continuously driving these global efficiency measures across regions and units. And, sometimes redundancies are unfortunately inevitable."
Ericsson has continued to struggle over the past few years. Last month, UK mobile operator O2 said it was dropping Ericsson following repeated outages blamed on Ericsson networking kit, then backtracked to say it was just upgrading an Ericsson system. Sony also ended its mobile phone partnership with Ericsson through a buyout completed earlier this year.
According to principal analyst at Pund-IT Charles King, Ericsson's recent woes have to do with an increase in competition and the struggling European economy.
"I believe Ericsson is facing two significant problems: One is increasing competition in its core telecom infrastructure business; and the other is continuing weakness in the global economy that is impacting numerous companies in Europe," King told The INQUIRER.
"The first issue is something Ericsson seems well positioned to address, and the company is in the process of a reorganisation that's designed to help it become more effectively competitive both in Europe and abroad. The second point is more problematic and, is frankly, beyond the abilities of any one company to change." µ