With investments into next-gen communications continuing to ramp up, Nokia has decided to cut up to 10,000 jobs over the next two years to help cut costs and reinvest resources into 5G.
In a statement issued earlier today, Nokia said that by eliminating between 5,000 and 10,000 positions, it will reduce its cost base by around 600 million euros by the end of 2023. The savings will be funneled towards additional investments into R&D, “future capabilities,” and salary inflation.
Currently, Nokia says it employs approximately 90,000 people, so this reduction represents around a 5% to 10% reduction in its workforce. Nokia also says it will streamline its business operations, particularly now that it has four distinct business groups that Nokia CEO Pekka Lundmark says have “a clear path to sustainable, profitable growth.”
The four business groups are Network Infrastructure, Nokia Technologies, Cloud and Network Services, and Mobile Networks, with the latter two being subject to the most changes as Nokia tries to beef up its 5G resources and cloud-based service offerings.
The real end goal for Nokia is that by investing more in 5G, the company hopes to catch up with other 5G networking component makers such as Huawei and Ericcson, which have taken a lead in 5G equipment deployments.
The good news is that with the U.S. and U.K. having prohibited Huawei from providing networking equipment that’s used in their 5G networks (along with a number of other European countries possibly following suit), Nokia may be facing slightly less competition than it would normally, which could give Nokia an easier path towards future growth.
And with recent partnerships with Microsoft, Google, and Amazon to expand 5G support for Azure, the Google Cloud, and AWS, it seems like Nokia will have no shortage of expansion opportunities, at least for now.
DISCUSSION
I can’t help but feel conflicted by all this. On one side it’s horrible when people lose their jobs. On the other side, if you have already worked in such a big company, you see how some departments often get over bloated and slow. Re-training people is not always an option as you won’t be able to re-train somebody that worked in sales for 30 years to be a programmer. This is just a necessary evil companies do, like we consumers also do. If we don’t need something, we’ll also cut the subscription.
I definitely think that Nokia will go in the right direction and will be employing more people in the future than what they’re doing now. Currently they’re not in the position to though.