Nokia is set to implement a significant workforce reduction of up to 14,000 jobs by 2026, as part of a strategic effort to combat a 20% decline in sales during the third quarter. The company cites slowing 5G demand, particularly in North America, as a major factor driving the decision.
Nokia’s Workforce Reduction Plan:
Nokia plans to cut between 9,000 and 14,000 jobs globally by the end of 2026.
This initiative is aimed at reducing costs due to a 20% decline in sales reported during the third quarter.
Reasons for Sales Decline:
The sales slump is attributed to decreased demand for 5G equipment, particularly in North America.
Cost-Saving Goals:
Nokia aims to save between €800 million and €1.2 billion by 2026.
This move is in response to challenges posed by factors such as high inflation, rising interest rates, and reduced customer spending.
CEO’s Strategic Vision:
CEO Pekka Lundmark emphasizes the need for investments in networks enhanced by cloud computing and AI.
The decision for workforce reduction is driven by uncertainties in market recovery.
Projected Savings:
Initial reductions are expected to save the company €400 million in 2024 and €300 million in 2025.
CEO’s Support for Employees:
CEO Pekka Lundmark acknowledges the difficulty of decisions impacting employees and assures support for those affected.
Nokia’s Evolution:
Nokia transitioned from being a leading mobile phone manufacturer to focusing on telecom equipment after selling its handset division.
Nokia’s Role in 5G:
Nokia emerged as a primary equipment provider for BT after the UK restricted Huawei from its 5G networks.
Industry-Wide Impact:
5G equipment manufacturers, including Nokia and Ericsson, face challenges as operators in the US and EU reduce spending.
Tech Industry’s Response:
Several major tech companies, such as Meta and Amazon, have implemented workforce reductions in response to economic challenges. Notably, a substantial percentage of affected employees found new employment within a short period.
Nokia’s proactive approach to cost-cutting reflects the evolving dynamics of the 5G market. The company’s strategic decisions will likely play a pivotal role in shaping its future trajectory within the telecom industry.
