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: