Ericsson Australia and New Zealand has announced today that it intends to slash the number of its contractors in half and reduce its permanent workforce by around 100 over the next six months.
The 200 contractors and 100 permanent employees will be losing their jobs due to projects nearing completion and a "global cost adjustment program" flagged by the global group in February which aimed to cut costs by around US$588 million globally.
Around 1660 permanent employees currently work at Ericsson in Australia and New Zealand. The company also hires the services of around 405 people in a contracting capacity.
On the Australian job losses Ericsson's director of HR Tristram Gray, said, "While it is always difficult to make these kinds of decisions, we are making every effort to support our employees at this time. In line with our strategy, we will continue to invest in developing our people to address future business opportunities."
The employees will receive their "above market" full entitlements, according to the company, and will also be offered outplacement, financial planning and counseling services support.
The move follows years in which Ericsson seemed to be enjoying success, having been chosen to build Telstra's billion dollar Next G network, although the carrier admitted the contract had pushed it to the limit.
The company is behind with the filing of its local results to the Australian Securities and Investments Commission, with the latest numbers available for the year to 31 December 2006. For that year, Ericsson Australia raked in $1.41 billion in revenue, a 153 per cent increase over the $557.72 million booked the previous year. Most of the increase was considered to have come from the Telstra contract.
However, despite the increase in revenue, Ericsson Australia's overall net profit after tax declined due to increases in expenses such as raw material costs, dropping 38.2 per cent to $17.61 million.
Dollars which could be around the corner include those for supplying services and components for the government's $4.7 billion National Broadband Network. Analyst firm Ovum's research director David Kennedy said in October he considered the strongest contenders for the lion's share of the work to include Alcatel Lucent, Ericsson and Huawei.