Telecom equipment maker Nokia revealed plans to reduce workforce to 80,000–85,000 as compared with approximately 90,000 employees at present — as part of a major cost saving program.
Nokia’s business groups will invest in R&D and capabilities including 5G, cloud and digital infrastructure, as well as other areas that will benefit Nokia in the long-term.
“These plans are expected to result in an 80,000–85,000 employee organization over an 18–24-month period, instead of the approximately 90,000 employees Nokia has today. The exact number will depend on market developments over the next two years,” Nokia said.
Nokia’s business groups will provide updates on their future strategies and financial outlook assumptions on Capital Markets Day on 18 March.
Nokia expects lower cost base of 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. Additional long-term benefits that Nokia will action include streamlining its portfolio and reducing site fragmentation.
Nokia expects restructuring and associated charges of approximately EUR 600–700 million, of which approximately 50 percent is expected in 2021, approximately 15 percent is expected in 2022, and approximately 35 percent is expected in 2023. In addition, Nokia expects approximately EUR 500 million of cash outflows related to its previous restructuring program.
Nokia now has four business groups.
“Each business group will aim for technology leadership. In those areas where we choose to compete, we will play to win. We are enhancing product quality and cost competitiveness, and investing in the right skills and capabilities,” Pekka Lundmark, president and CEO of Nokia, said.
Mobile Networks will focus on strengthening technology leadership and will invest in 5G R&D. It will accelerate efforts to digitalize processes and tools across the value chain. It will streamline its portfolio and reduce investment levels in mature or declining parts of the portfolio; continue to reduce site fragmentation; reduce overlapping activities and drive cost efficiencies.
Cloud and Network Services intends to align portfolios and streamline service models; strengthen technology leadership by refocusing R&D resources to emerging growth opportunities; streamline operations and support functions and increase productivity through reduced site fragmentation.
Network Infrastructure will remain largely unchanged although it will increase its R&D investments and plan for new capabilities in order to meet customer demand and support portfolio innovation.
Nokia Technologies will remain largely unchanged. It will continue to manage costs to enable it to invest in future technologies and maintain high levels of profitability.