Ericsson is reportedly planning to cut 25,000 jobs in response to crisis | Hacker News Reader

Ericsson is reportedly planning to cut 25,000 jobs in response to crisis

nordic.businessinsider.com

101 pointsscrpn36 comments

I used to work for Ericsson R&D, so I am sad to see this, especially for my previous colleagues. There are some very sharp and dedicated engineers there.

At least this cut seems to mostly affect Managed Services. That is the division that basically manages telcos networks for them. It was a big growth area a couple of years ago, but turned out to be very low margin.

Ericssons fundamental problem is that their only customers are the telecom operators, and the telcos aren't going to invest in infrastructure unless they have to. 4G rollout is mostly done in developed nations, and 5G is just a buzzword at the moment. Even if Ericsson invents some amazing technology that improves the end users experience, it doesn't mean they will make much money from it.

Of course the price pressure from Chinese competitors has not helped, even if Ericsson has held on to its marketshare.

> At least this cut seems to mostly affect Managed Services. That is the division that basically manages telcos networks for them. It was a big growth area a couple of years ago, but turned out to be very low margin.

Is it possible these telcoms will hire some of these Ericsson Managed Services folks to run their networks? I mean, someone has to manage the network.

At least in theory these networks have become more efficient to manage. For example the fixed and mobile networks often share the same core these days. Also likely Ericsson had to promise efficiency gains when taking over the business. Last but not least as a network equipment provider Ericsson has more interest in managing the networks and maintaining a big footprint than making profit from doing so. Their core business is selling equipment.

This is kinda distressing. I'm mostly all for free trade, but the impression I have is that Chinese competitors undercut Ericcson by not paying for patents. If that is the case, would it make sense to sanction those Chinese companies that do it, and thus take their products off the market in the developed countries? (Please correct me if my assumptions are wrong)

Of course, and this is exactly why tariffs exist, to level the playing field.

Otherwise whatever country has the most lax regulation and labor laws wins.

> Of course, and this is exactly why tariffs exist, to level the playing field.

Tariffs can be used for this purpose, but they traditionally weren't used to "level the playing field". They were traditionally used to benefit local goods over imported goods. The history of the US and England are rife with counterexamples of "level playing field" tariffs.

Ehh, Erixxson's loss is the consumer's gain.

Patent law is far overreaching in both breadth and length. Anything that undercuts it is a good thing.

I agree patent laws are abused/overused (cough cough Qualcomm) but the solution is not to get rid of them altogether, but to reform them to make them more sensible.

In any case, I think right now Ericsson definitely needs to assume that Chinese will use their technology at some point and plan for that contingency.

I don't disagree with China playing fast and loose with IP, but those actions wouldn't happen in a vaccuum.

China has WTO trade laws that protect them until a court case makes the connection between intentional IP violations and the unfair trade competition. Even after that is established (which can take many years), China can assert a counter-action using WTO rules to find whatever trade laws those same western+developed countries are violating.

Steve Bannon just talked about this in an unscripted interview for a newspaper. If it happens, pain will ratchet up for everyone involved. It will take a decade or more for all of the ripples of this type of trade war to calm. Until then, ratcheting up of tariffs will make it far more expensive to live in any country involved.

Huwawei opened a large office (about 1K workers) here in Kista beside Ericsson's global headquarters - obviously to pinch workers/IP. I can't imagine the Chinese tolerating Ericsson opening a large office beside Huwawei's HQ!

There is only limited differentiation on the mobile services side thus the service providers are primarily in a price competition in most markets. In addition some are still merging although that has slowed a lot. As a result the network operators are not so eager to invest. I suspect 5G build out will be a lot slower and it seems Ericsson sees it the same way.

I worked for Ericsson for 8 years in San Jose office. All your observations are accurate. I can't say about Ericsson's wireless products, but from IP networking, here are few more things:

1) Market & Competition: As mentioned in another thread below, Chinese competitors were severely undercutting us (there was constant threat from Huawei). One customer in middle east that I worked with comes to mind. We were developing a complex feature for them (Bridge Virtual Interface [BVI] over VRRP and few more protocols). 2-4 engineers in San Jose and 1-2 at customer site. Huawei had close to 200 engineers on site to address any issue. We just didn't stand a chance.

Chinese companies have huge advantage over West/European companies. Relatively inexpensive, high quality labor.

2) Commoditizing of IP Networking: Ericsson's investment in IP networking was a huge sunk cost. Traditional networking industry is getting commoditized. It's very inexpensive to make a whitebox switch covering good 90% use cases. Therefore, * Cisco's revenue of core networking products is on steady decline * Brocade is being broken up on to pieces and being sold * Juniper has been on market for sale (at least rumors) * Ericsson laid off pretty much everyone in Redback last year and partnered with Cisco in 2015. * Only Arista Networks is doing well.

It's very hard for networking companies to survive any more on core, edge or campus switching products alone.

3) Engineering vs Management: Ericsson brought management heavy style to workplace. It was very different to SV culture. In 2007, from concept to delivering a feature required writing 3 documents. By 2015, we had to write 6 documents. Feature velocity came to a crawl. Engineers clearly felt pulled back. Brilliant engineers, industry stalwarts, started leaving one by one.

3) Compensation: Ericsson's benefits was employee friendly, particularly for engineers with families. Decent work-life balance, good vacation policy, generous health insurance and 401K policy. The base pay was horrible. This is one of the reasons attracting young talent became hard. New college grads were getting offers in $120K-$140K range at other companies (heck, the summer intern I mentored got an offer more than my base pay :))

4) Culture: Slow to pivot. Cisco innovated the idea of spin-in/off to quickly develop products. But Ericsson (and others) took too long to change course. We were always playing catch up.

As the article mentions European employees are mostly safe, in north America they have already cut 7000. So the upcoming layoffs will mostly be in Asia. I guess competition with Samsung/Huawei is brutal and it is losing market share.

I didn't see such statement in the original article from https://www.svd.se/nytt-omfattande-sparpaket-pa-gang-i-erics... On the contrary, it's stated that "...there are far-reaching plans to centralize several of the European markets to reduce costs by reducing the number of employees." The bad thing with companies of such a big size (IBM, Nokia, Siemens..) is that there is always a lot of people to layoff.

Ericsson has to find it's own way through these troubled and quickly changing times. There are many areas such as Virtual Network Functions, Internet of Things, Hyperscale Datacenter System and many others which are being heavily worked upon and I think will give some good results.

In general I feel the world today needs far less workers and particularly fewer workers with college degrees.

I can see in my own case 8 years back there were 12 people in team and now just 2. Slowly product got stable and people left for other opportunities and positions were filled for short time or never filled. But from business perspective this application is working just fine with few fixes here and there. There is no brand new next-gen replacement that would need scores of developers.

I agree. Our need for more workers, both unskilled and skilled, is starting to plateau. We don't actually know how to deal with that[1], and people are starting to get antsy as opportunities become less and less common.

[1]Well, we do, but nothing that's implemented on a large scale yet.

Cheaper mediocre developers can do the maintenance basically. The creative ones would get bored anyway - why keep them around.

I don't really see how the example of a product team going from 12 people to 2 supports the case that the world needs fewer workers.

Most products go through a cycle where you need a lot of people to develop them at first, then they stabilize and require fewer people, and the other people move on to different products.

You can't just look at one product or team in isolation -- as long as there are new products to be built, there will be a need for those workers.

I agree anecdote is not sufficient. I wanted to extend my experience as national or worldwide trend, may be that is not the case. But when I read increasingly frequent layoffs at all major IT vendors (IBM/HP/Oracle/Capgemini/Tata/Infosys/Cognizant and many more ) I tend to think it is general trend.

New products will be built always but with multilayered designs, more and more functionality is going in libraries/frameworks in lower layers. So a new product started today will not need as many developers. Again I am not arguing about the general quality of such product but new developments are using fewer developers than past.

So my view of the layoffs at the big "IT Vendors" is simply that the tasks which they originally hired workers for became increasingly automated or moved to systems that were less labor intensive.

A lot of the workers in India, for one example, worked on things you would hardly call programming. e.g. creating charts from data, manually moving data from db to db etc. These kinds of tasks should have (IMO) been automated in the first place, and should not require full time employees to handle them. As the automation become more mature, stable and well adopted, the bigger vendors start using them and don't require fleets of humans to manage them anymore. For a concrete example, I think ansible (and related tools) probably "destroyed" thousands of jobs as you didn't need to manage bash scripts manually etc.

There is another fleet of people who are hired simply for maintaining, developing on legacy systems, people you wouldn't find in the US. e.g. COBOL programmers.

Ericsson are pumping money into the Valley to have a presence there - https://www.ericsson.com/thinkingahead/the-networked-society...

Engineers cost twice what they cost here in Stockholm. Then the Sponsorships in the Valley - Berkeley AmpLab. IMO, much of that is wasted. They want to build a halo effect, but are failing miserably. You can survive (and even thrive) outside the valley.

We see this in the Midwestern part of the US too. I've worked at several large Midwestern companies who created a Silicon Valley presence so they could "innovate" or "disrupt", or whatever. None of those satellite offices have worked out, and were all a huge waste of money.

It turns out that unless you're one of the big tech giants, or a super cool startup, you will not be hiring the best in SV. And you'll be paying for the privilege.

Most of these companies are now learning that Midwest based employees are just as good as their SV counterparts, and cost a whole lot less.

As always, it depends. I do see your point, and no doubt there are companies that don't understand how the market in the Valley really works and are bound to lose money. But there are also companies that get it right. e.g. I used to work at Rackspace, which is headquartered in San Antonio, Texas, but they do have a (smaller) office in San Francisco as well. The people I worked with in that office were pretty damn smart (IMO, maybe my expectations are low).

Smart engineers evaluate opportunities based on hard facts rather than "oh cool its a cool startup with ping pong in the office!" etc. I don't know why this image is so common when so many of the smartest people I've worked with have not been swayed by it as much as objectively assessing the cold, hard facts as to: what they would be doing, who would they be working with, what sort of impact can they have, etc.

The other side to that is that people in tech who know they're good come to the Valley because they can get 2-5x the pay. It doesn't hurt that California is beautiful and has a lot of other nice qualities (weather, being the epicenter of the tech scene, close to the ocean and the mountains). Sure, it's true that we don't have a monopoly on good engineers, but for many, once they realize that they're undervalued in their current position (so, a "good deal" for companies), they might try to get a huge raise, get denied, then move to the valley. That's generally how it works, and it works pretty well. Despite the stupidly high cost of living and salaries, companies in the valley still manage to do alright. For employees, layoffs at one company aren't really a problem, since every other company is always hiring. It only becomes a problem when the whole sector is in trouble, which we haven't seen in a while. Hopefully things are diversified enough by now that e.g. AdTech failing wouldn't mean layoffs like the dot-com bust. Given how many areas rely on technology and the internet these days, I see another dot-com bust as decreasingly likely -- not that it couldn't happen, but I think it's more tied to the overall economy vs one sector in the corner. If biotech runs into trouble, VR/AR probably wouldn't be affected much. If payment tech gets disrupted, silicon design shouldn't dip much, etc etc.

Your first point rings extremely true from my own experience. It's of course the case that there are bright, talented, and experienced engineers in places other than the Bay Area, but it's hard to counter the brain drain that occurs. The best engineers who remain become comparatively rarer and so it becomes progressively more difficult to build a team of seasoned engineers as opposed to having a single veteran try and mentor six or seven inexperienced coworkers.

And in that scenario, you're extremely vulnerable to that senior employee getting burnt out from spending most of their time doing code reviews and putting out fires rather than building things themselves. You're also vulnerable to that person getting an enticing offer from a big-name company in the valley or an exciting-sounding startup in SF. Many of these opportunities are even remote, so this can happen even when your best employees don't have any desire to move.

So yeah, it's possible to find good talent in other locales. But there's a lot more competition for that talent, it's hard to build a critical mass of it when the best employees are constantly moving away, and there are a ton of challenges you have to deal with as a result.

As someone who has developed software in Palo Alto and in other places, I can testify to a mystique of the valley that some hold. It's true that you can get things done -- particularly scale a company and get investors -- more easily there then anywhere else in the world. And there are a lot of the world's greatest computer scientists there. But some people think that it is the only place, or a least the easiest place, that you can do really cutting edge engineering. That seems a little more dubious to me.

Well, I just started learning Erlang... hopefully this doesn't affect that D;

The article makes it sound like that team would not be affected: "However, the 14,000 employee-strong Swedish work force is to stay intact – at least all R&D engineers."

if you look at the latest release[0] there seems to be 33 contributors. While a bunch of the commits is made by Erlang/OTP(I assume this is Ericsson) it is not the 1990 anymore and a lot of tech like rabbitmq and couchdb uses erlang to reach "webscale" deployments.

[0]: https://github.com/erlang/otp/compare/OTP-20.0...master

> tech like rabbitmq and couchdb

and a whole sub-community in elixir. erlang is gonna be just fine.

Almost all these commits are from Ericsson employees. The community did start contributing bigger things in later years (the improved unicode support is a good example), but the core team is still very central to the development, and their main bug tracker is not open.

The current release wouldn't turn into a pumpkin, even if Ericsson stopped supporting it tomorrow. Even the older releases continue to work. :)

>“Right now, Ericsson is hiring engineers to repair the damage that earlier saving packages caused. It’s crucial that most of all the Swedish R&D department remains somewhat protected. They are the ones who will come up with the new solutions that will drive sales in the long term,” said a person with insight into the process.

This is something I have seen at prior companies. Still hiring to fix issues from previous overly-ambitious cutbacks. Seems like execs could learn from this...

Is Ericsson going to eventually lose to the Chinese competition? What is Ericsson's advantage over Chinese firms?

Patents, R&D and not being at risk of being spied upon by back doors installed by the Chinese Govt.

Dagbladet!

Reply on news.ycombinator.com