As the company plans to refocus its core strategy and streamline operations, it announces 17,000 jobs will be cut.
Nokia
Siemens Networks, a joint venture of Nokia and Siemens, said it plans to reduce
its global workforce by approximately 17,000 by the end of 2013. These
reductions are driven by the company's plans to align its workforce with its
new strategy of end-to-end mobile network infrastructure and services, with a
particular emphasis on mobile broadband, as well as through a range of
productivity and efficiency measures. The total global workforce of Nokia
Siemens Networks on Nov. 1 was approximately 74,000.
These
measures are expected to include the elimination of the company's matrix
organizational structure, site consolidation, transfer of activities to global
delivery centers, consolidation of certain central functions, cost synergies
from the integration of Motorola's wireless assets, efficiencies in service
operations, and companywide process simplification. The company's services
organization will further strengthen its global delivery system, while business
areas not consistent with the new strategy will be divested or managed for
value.
"We
believe that the future of our industry is in mobile broadband and services-and
we aim to be an undisputed leader in these areas," said Rajeev Suri, CEO of
Nokia Siemens Networks. "At the same time, we need to take the necessary steps
to maintain long-term competitiveness and improve profitability in a
challenging telecommunications market."
The
company plans to realign its business to focus on mobile broadband (including
optical), customer experience management and services, and looks to reduce its
non-International Finance Reporting Standards (IFRS) annualized operating
expenses and production overheads by approximately $1.3 billion by the end of
2013, compared with the end of 2011.
"Our
goal is to provide the world's most efficient mobile networks, the intelligence
to maximize the value of those networks, and the services capability to make it
all work seamlessly," Suri said. "Despite the need to restructure parts of our
company, our commitment to research and development remains unchanged, with
investment in mobile broadband expected to increase over the coming years."
In
order to reduce the impact of the planned reductions, Nokia Siemens Networks
intends to launch locally led programs at the most affected sites to provide retraining
and re-employment support. The company will also target areas such as real
estate, information technology, product and service procurement costs, overall
general and administrative expenses, and a "significant" reduction of suppliers
to further lower costs and improve quality.
"As
we look toward the prospect of an independent future, we need to take action
now to improve our profitability and cash generation," said Suri. "These
planned reductions are regrettable but necessary-and it is our goal to make
them in a fair and responsible way, providing the support we can to employees
and communities."
Nathan Eddy is Associate Editor, Midmarket, at eWEEK.com. Before joining eWEEK.com, Nate was a writer with ChannelWeb and he served as an editor at FierceMarkets. He is a graduate of the Medill School of Journalism at Northwestern University.
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