talk is cheap

Unless your company is Chinese, it’s a tough time to be a telecoms engineer

October 9, 2013
October 9, 2013

Alcatel-Lucent’s announcement of 10,000 job cuts caught many by surprise, not least the French government, which vows to fight the layoffs alongside unions. Those familiar with trends in the telecoms equipment industry are not as surprised by the cuts; they are only the latest in a string of layoffs at network suppliers, driven by stiff competition from Chinese challengers.

Huawei and ZTE have rapidly taken market share from the likes of Alcatel-Lucent, thanks to lower costs and financial support from the cash-rich Chinese state. In its latest scorecard of infrastructure vendors, research firm Infonetics ranked Huawei first according to its index of qualitative and quantitative measures. The Chinese company is now the world’s second-largest supplier of telecoms network equipment, a “feared and formidable competitor” for incumbent vendors like Alcatel-Lucent, Ericsson, Nokia and Cisco, according to Infonetics.

Huawei aims to double its $35 billion revenue in 2012 by 2017, while its Western rivals desperately cut costs to defend their current positions. Non-Chinese nationals account for about a fifth of Huawei’s 150,000 employees, according to the company. This share may be set to grow, as more than 50,000 jobs have recently been cut by American and European telecoms vendors:

  • Alcatel-Lucent: The French-American group announced 10,000 job cuts yesterday.
  • Cisco: The American equipment maker announced 4,000 layoffs in August, following 6,500 cuts as part of a previous restructuring plan.
  • Ericsson: A struggling Swiss-Swedish joint venture with STMicroelectronics was dissolved in August, with 1,600 jobs lost, on top of 1,700 cuts made the year before. The Stockholm-based parent company also reduced payrolls in its home country by 1,399 in March.
  • Nokia Siemens Networks: The former Finnish-German joint-venture, now fully owned by Nokia, has cut more than 20,000 jobs over the past two years, with another 8,500 layoffs under consideration according to a Bloomberg report in August.

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