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."