Research and Development are the key parts to any organisation that is based around technology. Especially so in the case of hardware manufactures. It does beg the question then, why has Ericsson, the world’s largest mobile network vendor, planning to make 2,200 redundancies in Sweden, mainly in the R&D team? Of course there will be other corporate casualties, but with the majority being cut from such important teams such as R&D, it does seem as though this isn’t a smart move, even if Ericsson have said it is part of a wider two-year cost-cutting program.

This decision is not new; it was previously announced at the firm’s Capital Markets Day, in November of 2014. But, the firm has given further details about the program, including where the redundancies are going to take place. It has also been reported that that the firm is also planning further redundancies outside of Sweden, as part of the same program. Interestingly, the firm has also confirmed a projected saving of SEK9 billion ($1.2 billion) over the same period.

The company’s aim is to reduce cost, both internally and externally. The internal cost cutting exercise was undertaken by reducing headcount and the external costs are via a program, which will run into 2017.

As part of the external cost cutting, outside consultants and the consolidation of their IT portfolio is also on the table. Also in the program, the firm is establishing three global ICT centres with a common test/development strategy and methodology for R&D. The staff culling exercise will target R&D, service delivery and the supply chain. Everyone else is far from safe either, as the firm is also looking into sales, general and administration.

The threat of redundancy is all the more evident in today’s economic climate and tough as it may be on the staff affected by redundancy, Ericsson is a massive firm with 115,000 employees located across the globe. Ericsson is hoping to deploy the savings that will be made  into growth areas, such as cloud, IP, TV & Media and OSS/BSS.

[image via tpn.tv]

SOURCE: Mobile World Live