In hopes to reduce the costs and invest more in research capabilities, Nokia is planning to cut up to 10,000 jobs within two years As announced by the phone maker on Tuesday.
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Nokia’s New Business Development Strategy
With this move, the Finnish telecoms group seeks to step up its challenge to Sweden’s Ericsson and China’s Huawei.
The Chief Executive Pekka Lundmark, who had taken over the position last year has been making changes.
The changes are mainly focused on recovering from product missteps under the company’s previous management.
It had also hurt its 5G ambitions and also dragged on its shares.
In October, he announced a new strategy of having four business groups in Nokia.
He further mentioned that the company would “do whatever it takes” to take the lead in 5G, as it banks on also capturing shares from Huawei.
On Thursday, he is expected to present his long-term strategy and discuss action plans to set financial targets during the company’s capital markets day.
Restructuring In Nokia
While talking about the changes, Nokia said that it expects about 600 million euros ($715 million) to 700 million euros of restructuring and associated charges by 2023.
Further, Lundmark said, “Decisions that may have a potential impact on our employees are never taken lightly,”.
“My priority is to ensure that everyone impacted is supported through this process,” he added.
So far, Nokia has 90,000 employees, as the company has cut thousands of jobs following its acquisition of Alcatel-Lucent in 2016.
With the latest restructuring, Nokia expects to lower its cost base by about 600 million euros by the end of 2023.
Out of that, almost half of the savings are expected to be realized in 2021.
Impact On Countries
While talking about the impact, a Nokia representative said, “These plans are global and likely to affect most countries,”.
“In Europe, we have only just informed local works councils and expect the consultation processes to start shortly, where applicable,” said the representative.
In case of France, Nokia has already cut more than a thousand jobs last year, so now it was excluded from the current restructuring.
Focus On Research And Development
Lundmark said, “The company is shifting focus from general costs to research and development which is expected to result in growth and better margins in the future,”.
With this move, Nokia is planning to increase investments in research and development and also the future capabilities including 5G, cloud and digital infrastructure.
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