Nokia, faced with a 20 percent sales decline in the September quarter, has unveiled a sweeping restructuring plan.
To combat costs and bolster its financial outlook, the Finnish telecom company is set to lay off approximately 14,000 employees.
This strategic move aims to achieve substantial savings, projected at 40 million euros in 2024 and 30 million euros in 2025, which may require the reduction of the workforce from 86,000 to 72,000 to 77,000.
CEO’s Vision and Employee Support
Nokia’s President and CEO, Pekka Lundmark, acknowledged the gravity of the decision, emphasizing its impact on the company’s workforce.
He affirmed that Nokia is committed to supporting the affected employees during this challenging period.
The layoffs, while regrettable, are deemed necessary to enhance cost efficiency, ensuring the company’s viability in an uncertain market environment and its long-term profitability.
Cloud Computing and AI Investment
While expressing confidence in Nokia’s prospects in the mid and long term, Lundmark underscored the importance of investments in the era of cloud computing and artificial intelligence.
He noted that substantial achievements require strategic actions on three fronts: strategy, operations, and cost optimization.
These measures involve granting business groups more autonomy, streamlining the operating model by integrating the sales team into business units, and rigorous cost reduction efforts.
Nokia’s Cost Reduction Goal
Nokia has set a goal to reduce costs on a gross basis, without adjusting for inflation, from 80 million euros (Rs 7,014.12 crore) to 120 million euros (Rs 10,521.18 crore) by 2023.
As of the latest financial report, Nokia’s net sales in the September quarter declined from 624 million euros (Rs 54.7 thousand crore) to 498 million euros (Rs 43.7 thousand crore) on an annual basis, signaling the need for strategic restructuring.