Nokia Siemens Networks (NSN) today announced it will layoff 17,000 workers in a major strategy shift that will see the company focusing more on mobile broadband and related services.
"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," said 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."
NSN plans to realign its business to focus on mobile broadband (including optical), customer experience management and services. Business areas not consistent with the new strategy will be divested or managed for value. Quality and innovation will continue to be priorities for the company, with ongoing investment in both areas.
The company aims to reduce operating expenses and production overheads by euro $1 billion by the end of 2013, compared with the end of 2011. While these savings are expected to come largely from organizational streamlining, the company will also target areas such as real estate, information technology, product and service procurement costs, overall general and administrative expenses, and a significant reduction of suppliers in order to further lower costs and improve quality.
As a result of the effort, NSN will reduce its global workforce by approximately 17,000 workers by the end of 2013. The layoffs are expected to include elimination of the company's matrix organizational structure, site consolidation, transfer of activities to global delivery centers, consolidation of certain central functions, cost synergies from the integration of Motorola's wireless assets, efficiencies in service operations and company-wide process simplification.
The company said that more information will be shared in impacted countries as the process proceeds. In order to reduce the impact of the planned reductions, NSN intends to launch local programs at the most affected sites to provide re-training and re-employment support.
"As we look toward the prospect of an independent future, we need to take action now to improve our profitability and cash generation," Suri said. "These planned reductions are regrettable but necessary – and it is our goal to make them in a fair and responsible way, providing the support we can to employees and communities."