Nokia Siemens is drastically cutting its workforce as part of its strategy to streamline operations and cut costs
HR personnel at Nokia Siemens Networks are set for a busy period, after the company announced 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, which is a joint venture of Nokia and Siemens, was approximately 74,000 as of 1 November 2011.
These measures are expected to include the elimination of the company’s matrix organisational structure, site consolidation, transfer of activities to global delivery centres, consolidation of certain central functions, cost synergies from the integration of Motorola’s wireless assets, efficiencies in service operations, and company-wide process simplification.
The company’s services organisation 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) annualised operating expenses and production overheads by approximately $1.3 billion (£835m) 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 maximise 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.”
Regrettable But Necessary
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.”