Nokia to cut 10,000 jobs over the next two years

Nokia announced on Tuesday its plans to slash as many as 10,000 jobs over the next two years to supposedly allow it to cut costs to allow for more investment into research and development as it plans to step up to its rivals.

The company is looking to make up for product missteps from the past that could potentially stand in the way of its 5G ambitions as the Finnish company looks to provide as much of the world as possible with high-speed internet to advance hyperconnectivity and the digital transformation.

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The group lost early 5G gains to rivals Ericsson and Huawei and is looking for ways to regain its competitive edge in the future.

New CEO Pekka Lundmark is striving to do "whatever it takes" to become an industry leader in 5G technologies, including the announcement of its new business strategy in October, which will see the company split into four business groups.

The company announced on Tuesday it plans to have 80,000-85,000 employees by the end of 2023, down from the 90,000 it has now as part of a "reset" of its cost position.

Lundmark expects this to be a long-term transition and is expected to present his plans and financial targets at a conference on Thursday.

Nokia has warned the job losses could cost anywhere between €600-700 million in restructuring charges by 2023, with over half of that cost expected to come in 2021.

In a statement, he said: “Decisions that may have a potential impact on our employees are never taken lightly. My priority is to ensure that everyone impacted is supported through this process.

“In those areas where we choose to compete, we will play to win. We are therefore enhancing product quality and cost competitiveness, and investing in the right skills and capabilities.”

Nokia's French division, which has already seen one thousand job cuts in the last year, will be excluded from this restructuring.

Nokia's employee peak occurred in 2010 when it had 132,000 employees. Since then, it has slowly begun slimming its numbers despite the acquisitions of some of its main rivals.

These acquisitions caused it to founder early in the 5G rollout, which caught them unprepared.

Nokia plans to use its new emphasis on R&D to look for avenues to accelerate 5G technologies, cloud services and digital infrastructure.

Lundmark said: “The company is shifting focus from general costs to research and development which is expected to result in growth and better margins in the future."

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In particular, its cloud and networking services has been singled out as its main priority for future development.

It is also set to reduce development in older technologies and services as a consequence.

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