Ericsson cut 5,200 Swedish jobs in two years as its services bet hollowed out R&D

Ericsson was Sweden's largest private employer and the world's biggest mobile network maker, with 115,000 staff in 180 countries. In the 2010s it expanded aggressively into managed services — running other operators' networks for them — until the division served over a billion subscribers. The strategy padded revenue but squeezed margins and pulled engineers away from core R&D.

By 2014, earnings were falling. In March 2015, Ericsson announced 2,200 Swedish cuts, mostly in R&D and supply, aiming to save 9 billion kronor by 2017. The cuts did not stabilise the business. Revenue kept declining, and in July 2016 CEO Hans Vestberg stepped down after six years. Interim CEO Jan Frykhammar announced a second round in October: another 3,000 Swedish jobs, nearly 20% of the local workforce.

Börje Ekholm took over as CEO in January 2017 and refocused Ericsson on core network equipment, exiting media and managed services. The restructuring cost billions of kronor but restored profitability by 2019. Ericsson went on to become a leading 5G supplier — the position it had been too distracted to hold three years earlier.

Cut 5,200 Swedish jobs in two rounds, mostly in R&D and supply, before a new CEO refocused on core networks and restored profitability by 2019.

Managed services grew revenue but not margins, and pulled R&D engineers into operations work, eroding the technology lead that made Ericsson a market leader.

The board kept the CEO through years of declining earnings, delaying the strategic reset until two rounds of cuts were unavoidable.

The first round of cuts targeted R&D and supply — the functions that would build the next generation of products — rather than the low-margin services division.

A services business can grow revenue while hollowing out the R&D that made the company worth buying. Managed services looked like scale; it was a tax on the future.

Under Ekholm, Ericsson exited managed services and media, cut its product portfolio, and invested heavily in 5G. By 2020 it was one of three global suppliers of 5G radio equipment alongside Nokia and Huawei. The Swedish government had lost its largest private employer as a technology leader for the better part of a decade.