Up to 10'000 jobs at risk as Nokia restructures
Nokia says that it plans to reset the company's cost bases and invest in R&D and future capabilities including 5G, cloud and digital infrastructure, as well as other areas that will benefit Nokia in the long-term. Something that will result in the loss of jobs.
In October last year the company announced a new operating model aimed to better position the company for changing markets and align with customer needs. The new model was back then described as "optimised for better accountability and transparency, increased simplicity and improved cost-efficiency." “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,” says Pekka Lundmark, President and CEO, in a press release. “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.” Related to these plans, Nokia expects to lower the company’s cost base by approximately EUR 600 million by the end of 2023. These savings will take place gradually and will offset increased investments in R&D, future capabilities and costs related to salary inflation. Total restructuring and associated charges of approximately EUR 600–700 million, of which approximately 50% is expected in 2021, approximately 15% is expected in 2022, and approximately 35% is expected in 2023. Nokia says that these plans are expected to result in an 80'000–85'000 employee organisation over an 18–24-month period, instead of the approximately 90'000 employees Nokia has today. However, the exact number will depend on market developments over the next two years, the company says in the press release. “Decisions that may have a potential impact on our employees are never taken lightly. 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,” adds Lundmark.