The Finnish telecommunications giant Nokia announced that between 5 thousand and 10 thousand jobs are currently at risk and in an official statement published on March 16 2021, it confirmed its decision to reduce the company’s costs.
The reduction in the number of employees is part of a restructuring program that also includes a large investment in research and development to focus on 5G technology, cloud and digital infrastructures.
“Decisions that may have a potential impact on our employees are never taken lightly – explains Pekka Lundmark, elected President and CEO of Nokia last August – Ensuring we have the right setup and capabilities is a necessary step to deliver sustainable long-term performance. My priority is to ensure that everyone impacted is supported through this process”.
In October 2020, Nokia had already announced a new operating model designed to improve the company’s positioning in ever-changing markets, by competing with Swedish rival Ericsson and Chinese rival Huawei, and to better adapt to its customer needs.
Currently, the Finnish group’s workforce has about 90 thousand resources which in a couple of years could drop to 85-80 thousand, but as the company declares, the exact number of dismissal will mainly depend on the evolution of the market.
“Nokia now has four fully accountable business groups. Each of them has identified a clear path to sustainable, profitable growth and they are resetting their cost bases to invest in their future,” said Pekka Lundmark.
Mobile Networks aims to lead wireless mobility networks and associated services. The focus is on the consolidation of technology leadership, on the use of resources for 5G research and development and on the incentive towards the digitization of processes and tools across the value chain. Cloud and Network Services, in addition to enhancing technology leadership, will optimize service models, align portfolios, increase productivity and facilitate support and actions functions. Despite further investments in research and development, the path of Network Infrastructure will remain fundamentally unchanged. The same goes for Nokia Technologies which, however, will carefully manage its costs.
“Each business group will aim for technology leadership. In those areas where we choose to compete, we will play to win. We are therefore enhancing product quality and cost competitiveness, and investing in the right skills and capabilities”, stated Lundmark.
According to the company’s plans, the restructuring will reduce its cost base by approximately 600 million euros, in addition the total restructuring and associated charges will reach between 600 and 700 million euros, of which approximately 50% is expected for the year 2021, around 15% for 2022 and around 35% for 2023.