Nokia to Lay Off 4,000 Workers to Cut Costs

Even a market leader like Nokia has started showing the sickness symptoms in the ailing mobile markets. So it has decided to take some harsh steps to survive in the dwindling marketplace.

To deliver on its new strategy, Nokia today announced plans to align its global workforce and consolidate site operations. These measures are part of Nokia’s target to reduce its Devices & Services non-IFRS operating expenses by 1 billion euros for the full year 2013 in comparison to the full year 2010, as announced last week.

Earlier today, Nokia announced plans to form a strategic collaboration with Accenture that would result in the transfer of Nokia’s Symbian software activites, including about 3,000 employees to Accenture.

In addition, Nokia also plans to reduce its global workforce by about 4,000 employees by the end of 2012, with the majority of reductions in Denmark, Finland and the UK.

In accordance with country-by-country legal requirements, discussions with employee representatives started today, April 27.

Earlier, smelling trouble in its own domain, Nokia had started showing an unprecedented infatuation for arch rival Microsoft to leverage the latter’s market strength and credibility. A couple of months ago, it joined hands with Microsoft to enter the cutthroat mobile space. (Read: Nokia and Microsoft to Go Together in Mobile Market)

Simultaneously, it announced the appointment of Chris Weber as president of Nokia Inc. (US), and head of Markets, North America. He is a Microsoft veteran, who during his 16 years with the company held senior executive positions in sales, marketing and professional services. (Read: Nokia’s Love for Microsoft Grows with Chris Weber)

And even Stephen Elop (pictured above) who was appointed president and chief executive officer of Nokia in September last year also was head of Microsoft’s Business Division before joining Nokia. (Read: Nokia Gets New Boss Stephen Elop)

Nokia also unveiled a strategy to connect the “next billion” people to the Internet. The company planned to offer its low-cost mobile phones supported by Ovi services in the emerging markets. (Read: Nokia Plans to Connect Next Billion to Internet)

All these moves have not yet delivered any tangible benefits for Nokia. Hence, the cost cutting.

And Nokia is not alone in troubled waters. Most mobile companies have been too careless about technology that has been moving at snail’s pace in the mobile’s case because of small form factor, tired batteries, lack of suitable applications, and so on. Plus, they’ve virtually closed their eyes to really understand consumers’ tastes. (Read: Why Marketers are Chasing the Mobile Mirage)

Nokia also plans to consolidate the company’s research and product development sites so that each site has a clear role and mission. Nokia expects the expansion of some sites and the contraction or closure of others.

All employees affected by the reduction plans can stay on the Nokia payroll through the end of 2011. Nokia expects personnel reductions to occur in phases until the end of 2012, linked to the roll-out of Nokia’s planned product and services portfolio.

During this period, Nokia intends to ramp up its capacity for the development of Nokia smartphones based on the Windows Phone platform, the company’s broad range of mobile phones and its services portfolio.

“At Nokia, we have new clarity around our path forward, which is focused on our leadership across smart devices, mobile phones and future disruptions,” said Stephen Elop, Nokia president and CEO.

“However, with this new focus, we also will face reductions in our workforce. This is a difficult reality, and we are working closely with our employees and partners to identify long-term re-employment programs for the talented people of Nokia.”

The company is launching a comprehensive social responsibility program for employees and the communities likely to be affected by the personnel reductions. The program will be led locally, with local partners and stakeholders, and senior management support.

“We are offering those who are losing their jobs a range of options, from individual re-employment support and re-training to making investments to promote innovation and working with a variety of partners to create new opportunities,” Elop continued.

Nokia made this announcement today, April 27.

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