Why so many European tech firms downsized & froze hiring

Vodafone, Ericsson, Philips and British Telecom Group were amongst the firms that downsized this year


There were about 2.8 lakh software developers available in Ukraine before the war began say certain reports. Ace quality Ukrainian IT professionals have been serving firms in Canada, the US as well as countries of western Europe, including the UK, Germany, Denmark and the Netherlands. Most firms with a significant budget have been able to put together a team of developers sourced from Ukraine in a jiffy. With the pandemic-imposed move towards digitisation, talent from Ukraine was always in high demand. Having worked with various global companies in the areas of fintech, telecom, healthcare and automotive, Ukrainian youth have managed to hone their capabilities and communication skills too, creating a niche for themselves. However, the war affected this supply.

Without this constant and smooth supply of software skills and talent from Ukraine, many firms in Europe and the US have been unable to develop or implement digital transformation projects and other innovative solutions.

Now, companies across Europe have either paused hiring or are laying off people in a bid to reduce costs. The number of vacancies advertised has reduced drastically across at least 20 countries.

It is not just the talent in Ukraine that was rendered jobless by the war, but the supply of Ukrainian tech talent to firms across Europe was also deeply impacted. Locally, many Ukrainian youth gave up their jobs to volunteer during the war or join the army. Naturally, the sectors that were closely linked to Russia were the most badly hit. Then, there was inflation, probably at the highest ever in decades.

In the tech sector alone, at least eight companies have let go people in 2023.

In May 2023, British telecom firm, BT Group announced its intention to do away with about 55,000 jobs by 2030. It revealed its plans to replace some of these jobs with artificial intelligence. The announcement came at a time when the Group had completed the work of rolling out its fibre-optic network across the country. Once the fibre-optic network spreads and 3G is switched off, the Group has stated that it will need less manpower for maintenance. Therefore, it sees its present workforce of about 1,30,000 dropping by 40 per cent in about seven years.

In early 2023, Ericsson, the telecom equipment manufacturing company had announced plans to lay off 8,500 employees from its global workforce as part of a cost-cutting exercise. It aims to reduce costs by about $860 million by the end of 2023. At the time of announcement, Ericsson intended to cut 1,400 jobs in Sweden, rendering a significant part of its 1.05 lakh strong workforce jobless. The remaining will be laid off by next year, that is, 2024.

In May 2023, Vodafone, the British telecom company had announced 11,000 job cuts to be executed over a period of three years. Before this, the company had announced 1,000 job cuts in Italy and 1,300 in Germany.

Computer accessories firm, Logitech, laid off about 300 employees in March 2023. The Swiss-American manufacturer of keyboards and computer peripherals blamed the decision to downsize on the prevailing uncertainties, dwindling consumer spending and the macroeconomic environment. It is pertinent to mention here that the demand for computer peripherals had surged during the pandemic when most people were working from home. However, sales began to dwindle post pandemic.

In northern Europe, Finland witnessed major reorganisation within Nokia, as part of the telecom equipment-manufacturing company’s change negotiations. About 208 jobs were affected across Nokia offices in Finland.

Healthcare tech company, Philips, laid off about 6,000 people at the beginning of 2023, in a bid to restore profitability, improve safety of patients and increase the reliability of its supply chain. The Dutch health company announced these layoffs after it was forced to recall its respiratory devices / ventilators from the market following concerns that the machines used foam that could lead to toxicity. At the time of announcement, 50 per cent of the jobs cuts were to take place this year and the rest by 2025.

Towards the end of January 2023, SAP, the German software major, revealed its plans to axe 3,000 jobs in 2023. It decided to let go about 2.5 per cent of its global workforce, as part of a restructuring exercise, with the aim of improving efficiency. While the company was preparing to spend $270 to $330 million in severance due to the cuts, in the long term it expected to save at least $280 million per year by reducing headcount. The money thus saved can be channelised towards strategic growth areas, including its cloud unit.

In March 2023, Telecom Italia or TIM decided to axe about 2,000 jobs in Italy by offering a voluntary early retirement scheme as part of its efforts to make operations efficient. At the time, its workforce was about 40,000 strong in Italy. Bogged down by debts, TIM was planning to overhaul its operations and had also initiated the sale of its landline network assets as well as its submarine cable unit, Sparkle.

It wasn’t just the tech space that saw layoffs. Autoliv, the Swedish manufacturer of airbags and seatbelts announced plans to axe about 8,000 jobs recently, while Stellantis, the car manufacturer, in consultation with unions, announced 2,000 job cuts in Italy. Volvo said it would axe 1,600 jobs as part of a restructuring exercise. Deliveroo, the UK-based food-delivery firm axed about 350 jobs. Germany’s Deutsche Bank fired 800 people to cut costs, while Standard Chartered laid off cut over 100 roles in London, Singapore and Hong Kong. Layoffs were also announced at British Steel, Kone and SSAB.

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