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 with knowledge 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. 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.
“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.