Nortel, Cisco and Lenovo have all announced job cuts this week, adding to the woes of the already beleaguered IT industry.
The Canadian supplier, which entered administration in mid-January, is desperately looking at a range of cost reduction measures to decrease the company's cash burn. The measures include a thorough review of its real estate and IT licences, along with all supplier and customer contracts.
However, Mike Zafirovski, Nortel president and chief executive, said that tougher decisions had to be made in order to restructure the company in its efforts towards a successful emergence from creditor protection.
"With the unprecedented economic environment and resultant impacts on revenues, significant changes are required to regain our financial footing," he said.
Zafirovski added that notifying staff of the redundancies had been " difficult", and that the company was conscious of the personal impact on affected workers and their families. Nortel said it will make severance payments according to each country's employment legislation.
In terms of Nortel’s staff numbers, following the reduction by 5,000 positions, there will be approximately 26,200 employees. Nortel has also frozen its bonus scheme for current employees, and has asked for relief from its annual shareholder meeting, arguing that staff should not be distracted from stabilising the business.
Meanwhile, networking giant Cisco is also reducing its headcount. Reports in The Wall Street Journal suggest that there have been hundreds of redundancies this week as part of a long-term plan to cut 2,000 employees in total.
The news is not unexpected. The company had referred to "limited restructuring" in a call with financial analysts following the release of its second-quarter results.
In response to reports of the job cuts, a company spokesperson said, "Cisco is constantly evaluating its business priorities, resources and overall employee alignment as part of our business management process. This limited restructuring is part of our ongoing, targeted realignment of resources."
Lenovo will also make additional job cuts this week on top of the 2,500 already implemented. Lenovo will cut 450 jobs in China in global functions that support virtually all geographies and all business processes, according to a Lenovo spokesman.
"This is consistent with broader efforts to streamline the company and reduce costs in staff and support functions," he said. "These difficult decisions are in no way a reflection on the talent and dedication of our workforce, but are a reflection of the realities of the global economy and our fiercely competitive industry."
The total number of job cuts in the technology sector is difficult to determine, but the number is likely to be at least 100,000, although many have been contract staff.
Some of the largest cuts planned are by IBM with 16,000, Oracle with 8,000, BT with 10,000, AT&T with 12,000, Microsoft with 5,000, Philips with 6,000, Motorola with 4,000, SAP with 3,000, EMC with 2,400 and Virgin Media with 2,200.
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