New Delhi: Chinese telecom equipment maker Huawei has slashed its India revenue target for 2020 by up to 50% and is laying off 60-70% of staff, excluding those in research and development and the Global Service Centre, said several persons aware of the matter.The move comes as the company battles plunging demand for its equipment and services amid border hostilities between China and India. India has joined the US and UK in flagging security concerns over Huawei’s links to the Chinese government. New Delhi has already barred state-run carriers from sourcing equipment from Chinese companies Huawei and ZTE, and is believed to have informally nudged private telcos to replace Chinese equipment over time, without disrupting consumer services.Huawei did not respond to queries. The local unit of Huawei, which follows the calendar year for accounting in India, posted $1.2 billion in revenue in 2017 but it’s dropped since then, first hurt by the financial stress of telcos and then lately by anti-China business moves in India. Huawei is now targeting $350-500 million in revenue for 2020, compared with roughly $700-800 million it was aiming for earlier, one of the persons said.The revision in outlook stems from the company — which competes with the likes of Ericsson, Nokia, ZTE and Samsung — not expecting any new business from its only two major telecom customers in the country — Bharti Airtel and Vodafone Idea.‘Situation as Bad as in 2010’It is thus “letting go of on rolls, contract and third-party employees in India”, said one of the persons.Huawei is on the verge of losing business from Bharti Airtel in the Rest of Tamil Nadu (RoTN) circle to Ericsson, having already lost the Rajasthan circle late last year, ET reported recently. Once this happens, Huawei will be back to supplying gear for only two Bharti Airtel circles.The company’s India unit employs close to 700 people on its rolls, plus hundreds through third-party firms, according to industry estimates. This excludes staff in the company’s R&D centre.77189081“Workforce in network support, field deployment, outsourcing and sales department is being impacted majorly as there are no new projects or any clarity on new business from telecom operators,” said one of the persons cited above.Another said, “They only need people for some annual maintenance contracts for existing businesses with telcos. People who are still with the company are worried about their jobs since there aren’t many openings in the market.”Huawei has also scaled down its consumer or handset business after a US ban. It hasn’t launched many devices in India.“Both networks and consumer businesses have seen layoffs. They still have a big workforce in R&D and Global Service Centre (GSC) that have a global role to play,” said one source.The company is also finding it tough to expand its enterprise business in India, with no new major customer additions lately, said one of the persons. The business provides enterprise networking products including routers and switches to various industries.One of the sources said the situation is as bad as it was in 2010 for Huawei, when it faced similar scrutiny over security due to allegations of proximity to the Chinese state and army, accusations that the company has repeatedly denied. Huawei says the company is owned by its employees.Besides the Indian government’s moves, sources said both Airtel and Vodafone Idea Ltd (VIL) are concerned about sourcing equipment from Huawei, especially after TSMC, the world’s largest contract semiconductor maker, reportedly stopped taking new orders from the Chinese gear maker to comply with US export controls.Huawei signed multi-year deals for seven circles – some are shared with rival vendors—as recently as 2018 after Vodafone India and Idea Cellular merged.It’s not the only Chinese vendor hit by recent developments. ZTE has slashed its workforce by almost 30% to nearly 600 due to declining India business as telecom operators have cut down on expenditure. In May, ET reported that the workforce aligned by ZTE to manage BSNL, Vodafone Idea and Bharti Airtel networks had been cut by more than half due to financial pressure and falling business. While the government has barred Chinese vendors from providing telecom gear to BSNL, ZTE is still waiting to be paid more than Rs 1,000 crore in network-related dues by the state-run telco.
from Economic Times https://ift.tt/39tWHdT
No comments:
Post a Comment