Vodafone cuts 11,000 jobs in latest tech layoffs

Vodafone – a big name in phones sales and telecoms around the world – has announced plans to cut 11,000 jobs over the course of the next three years, in the latest round of tech layoffs.

Where several leading players from other sectors, like social media and computer manufacture, have announced layoffs as a “natural” readjustment after the boom period of the Covid-19 lockdowns, when the whole world stayed indoors if it could and the world of work was transformed forever, that’s not applicable in the case of Vodafone.

Unlike other sectors within the tech industry, Vodafone’s business model is relatively stable and cyclical, rather than subject to outside influences like the pandemic. The announcement of lockdowns didn’t see the company take on staff en masse, and the current socioeconomic strife hitting both supply chains and consumer spending doesn’t in itself warrant the Vodafone job cuts.

In fact, given that Vodafone profides wi-fi services in its own right, and acts as a distributor for tech and tablets, there’s some question over whether the job losses at the company can be thought of as “tech layoffs” at all – though the connectivity provision probably qualifies them this way. They’re not the result of the same pressures driving the overall wave of tech layoffs around the world.

Strategic cuts.

Instead of being cut as a result of the post-pandemic economic uncertainty, these livelihoods are being sacrificed mostly because Vodafone’s fortunes have actually suffered from several years of consistently poor performance.

The job cuts are the first plank in a strategy aimed at bottoming out the decline in sales and revenue, and starting Vodafone on a climb back to its position of supremacy from decades ago.

That’s in no sense hyperbole – twenty years ago, Vodafone was the world’s biggest telecom group, having swallowed up Germany’s Mannesmann in a $190 billion takeover – at that time, the largest such deal in history.

The intervening years have been less kind to Vodafone though, and despite still having market presence in 21 countries around the world, and partnership agreements with operators in 46 more, the company’s attempts to maintain its market share have faltered fairly broadly.

The 11,000 jobs represent more than 10% of Vodafone’s workforce worldwide, and will certainly affect the company’s UK headquarters, as well as some, as yet unspecified, other operations around the world. The company has major supply networks in Germany, Spain, Italy and in parts of Africa.

No excuses.

Unlike some of the other big tech players that are wielding the scythe this year, there was very little by way of excuse in the statement from CEO Margherita Della Valle, announcing the cuts.

“Our performance has not been good enough,” she said. “We will simplify our organization, cutting out complexity to regain our competitiveness.”

Quite what that means in terms of the surviving staff and networks at Vodafone – or what a “cutting of complexity” might mean to the company’s sales operations, as yet remains to be seen.

Della Valle, who has been with the company for almost 30 years, but was appointed CEO just weeks ago, ahead of the announcement, laid out her priorities for at least the short-term future of the company as “customers, simplicity and growth.”

That commitment to customers as the first order of business may well work to differentiate Vodafone in a crowded market. Its plan, as far as it has been revealed, is to invest more in its customer experience, while also focusing on its business customers – an area which is growing more and more attractive in European markets.

Something must be done.

Clearly though, something has needed to be done at Vodafone for some time. The company’s revenue for the year to March grew by just 0.3% to $49.8 billion. Meanwhile, adjusted earnings declined to $16 billion, which is below even the company’s own guidance. Vodafone shares have fallen an alarming 28% over just the past year.

Some of this decline can be and has been put down to the rising costs of energy in Europe, exacerbated by Russia’s illegal invasion of Ukraine. The company has also had a particularly weak year in its biggest market, Germany. But, as Della Valle said, much of the blame for the weak performance of Vodafone can and must rest with the company itself.

Vodafone says the job cuts will free up cash flow of around $3.6 billion dollars in this financial year. But as yet, details of how it intends to simplify its operations for the benefit of customers remain sketchy.

The mood of analysts on hearing the Vodafone news is tending towards a sense that it’s about time something was done – the company has posted lackluster results year after year recently.

And while there’s a sense of respect for Della Valle’s no-nonsense refusal to duck the punch of the company’s responsibility for its own situation, that’s not likely to translate into increased interest in Vodafone’s fortunes until at least some more strategic details of what the renewed focus on customer service and business plans actually amounts to in practical terms.

Salvation will be in the details.

Freeing up cash flow is all very well, but the climb-back – both of Vodafone itself and market confidence in the company – can’t begin until there’s a clearer sense of what the freed-up cash will do to improve the company’s focus and value proposition.

Perhaps understandably, the company’s shares fell 4% on the London market in the immediate wake of the job cut news. UK investors are likely to remain skittish, given that, after Germany, the country is one of Vodafone’s strongholds – and it has already been marked for at least some of the job cuts. Whether “simplicity” will see sales sites across the UK closed down or not is pure speculation at this point. When clarity comes, Vodafone may yet get a bounce in its levels of public trust in the UK – and its share price.

Meanwhile, Layoffs.fyi, the website tracking tech layoffs in 2023, says that 669 tech companies have now laid off 193,098 staff so far this year.