Ericsson, one of the world’s largest makers of telecommunications equipment, today announced plans to lay off 8,500 employees in a bid to reduce costs.

Ericsson detailed the move in an internal memo. “The way headcount reductions will be managed will differ depending on local country practice,” Ericsson Chief Executive Officer Borje Ekholm (pictured) wrote in the memo, which was obtained by Reuters. “In several countries the headcount reductions have already been communicated this week.”

Ericsson, officially Telefonaktiebolaget LM Ericsson, develops hardware and software that carriers use to build cell towers. The Stockholm-based company also provides 5G Core products. The 5G Core is a component of carrier networks that is responsible for key tasks such as coordinating the flow of data traffic and enforcing cybersecurity rules.

Alongside the carrier equipment market, Ericsson maintains a presence in a number of other segments. The company sells hardware that organizations can use to create dedicated 5G networks at locations such as factories. Additionally, Ericson provides a connected vehicle management platform that eases tasks such as rolling out over-the-air updates to cars.

At a December investor event, Ericsson projected that the market for 5G equipment will grow at a rate of 11% annually over the next three years. But the company cautioned that some of its customers plan to scale back their hardware spending. To address the changing market conditions, Ericsson announced plans to reduce its annual expenses by 9 billion Swedish kronor, or approximately $860 million, through the end of 2023.

The layoffs that Ericsson announced today are part of that cost reduction effort. The company expects most of the job cuts to take place during the first half of 2023, but estimates that the workforce reduction could potentially extend into 2024.

“We see potential to simplify and become more efficient across the company, especially in structural costs. But we are also working on our service delivery, supply, real estate and IT,” Ericsson told Light Reading in a statement. “It will, however, unfortunately result in a need to address headcount.”

The layoffs at Ericsson come a few months after another major player in the network equipment market, Cisco Systems Inc., also launched a workforce reduction initiative. Cisco in November announced plans to let go about 4,100 employees, or 5% of its workforce. The move is part of a cost-cutting effort that will also see the company reduce its real-estate footprint.

The job cuts in the network equipment segment come amid a broader wave of tech industry layoffs. Microsoft Corp., Salesforce Inc. and Splunk Inc. are among the major enterprise technology companies that have launched restructuring initiatives in recent months. Last November, Meta Platforms Inc. announced plans to let go about 11,000 employees, or 13% of its total workforce at the time. 

Photo: Ericsson