Nokia Siemens to Cut 23 Percent of Workforce

by Jordan Richardson on November 24, 2011

The struggles of Nokia Siemens, the global data networking and telecommunications company, have been well-documented.

Having faced stiff competition in the sector from the likes of Huawei and Ericsson, Nokia Siemens has needed something to give it a competitive boost. That something, at least this time around, is cutting some 17,000 jobs from its 74,000-strong workforce. The impetus behind the cuts is to save approximately $1.3 billion US in costs.

The reduction in workforce from the German-Finnish corporation will be worldwide and will reflect a renewed focus on network equipment. In this regard, Nokia Siemens is hoping to zero in on mobile broadband gear and associated services.

Most analysts have stated that cuts of this size were always expected, especially after Nokia Siemens failed to hone in on Internet network gear from Nortel. US-based Ciena Corp. bought that division from under the nose of Nokia Siemens for a cool $769 million.

Nokia Siemens did move on to Motorola, buying that company’s wireless network equipment unit in July of 2010 for $1.2 billion. And earlier this month, Nokia Siemens sold its microwave transport business to DragonWave in a deal estimated to clock in around the $154 million mark.

Nokia Siemens’ emphasis on “everything wireless” is the driving force of the company presently and the downscaling of staff echoes that sentiment. The trouble is cost, of course, as Nokia Siemens is having trouble moving products as economically as its Chinese competitors. Cutting down staff and hacking jobs is, at least in the minds of corporate leaders, as good a way as any to cut costs.

“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,” says Rajeev Suri, chief executive officer 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.”

Nokia Siemens notes that it also has plans to “target areas such as real estate, information technology, product and service procurement costs, overall general and administrative expenses, and a significant reduction in suppliers” to help cut costs.

It is helpful to remember that the 17,000 jobs lost, along with the associated job losses to Nokia Siemens’ streamlining efforts, amount to 17,000 individuals who will be thrust out of the workforce in tough economic times. There is always a human element to these stories to consider; these are not mere statistics.

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