Nokia To Cut Employees During Restructuring

Nokia will be re-setting its cost base and investing in future capabilities like 5G, cloud and digital infrastructure, a company press release stated, although all of that will come as the company reduces its base of employees.

The restructuring will result in layoffs, the release stated. There are currently 90,000 workers in the organization, and over the next 18 to 24 months, that number will be whittled down to between 80,000 and 85,000. The exact numbers are based on market developments at that time.

“Decisions that may have a potential impact on our employees are never taken lightly,” Nokia President and CEO Pekka Lundmark said in the release. “Ensuring we have the right setup and capabilities is a necessary step to deliver sustainable long-term performance. My priority is to ensure that everyone impacted is supported through this process.”

In October, the company said it would be rolling out a new business model intending “to better position the company for changing markets and align with customer needs. The new model is optimized for better accountability and transparency, increased simplicity and improved cost-efficiency,” according to the release.

Nokia expects a lower cost base of around 600 million euros by the end of 2023, which will be done gradually and offset more investments in research and development (R&D), future capabilities and costs related to salary inflation, the release stated.

There will be a “total restructuring” cost between 600 million euros and 700 million euros, with half of that coming this year. Fifteen percent will come next year, and another 35 percent will come in 2023. The company also expects around 500 million euros of cash outflows related to its previous restructuring program, according to the release.

The company plans to accelerate digital processes, including moving to the cloud and reducing investment levels in mature or declining parts of the portfolio, the release stated.

Nokia added industrial-grade 5G private wireless network solutions last year, which were intended to help with clients’ more demanding jobs like industrial and manufacturing use cases.