Newsletter
Nokia has just announced a massive job cut. The Finnish telecommunications company plans to lay off up to 14,000 employees to reduce its operational costs amid declining earnings. The mass layoffs will affect 16 percent of its current global workforce.
Nokia to lay off 14,000 employees across its global offices
In its earnings report for Q3 2023, Nokia said its net sales declined 20 percent year-on-year (YoY). The company generated a revenue of €4.98 billion (roughly $5.25 billion) this past quarter, down from €6.24 billion it made during the same period last year. Its profit declined a whopping 69 percent YoY to just €133 million (roughly $140 million).
Nokia says it will take decisive actions on three levels to tackle this economic downturn. The first action is strategic, with its business groups getting “more operational autonomy” for accelerated execution of plans. Second, it’s embedding sales teams into the business groups for a more streamlined corporate structure.
Finally, Nokia plans to reduce its cost base to increase operational efficiency and protect profitability. The firm is aiming to lower its cost base on a gross basis by between €800 million and €1,200 million by the end of 2026 compared to 2023. It expects these actions to help it achieve an operating margin of at least 14 percent by 2026.
Unfortunately, this will mean a massive job cut too. Nokia says its total global workforce may drop to 72,000 employees over the next three years, which means 14,000 layoffs from the 86,000 workers it has today. It has yet to finalize this layoff plan, but the company expects to cut at least 9,000 jobs in the coming years.
Nokia assures that the mass layoffs will not affect its R&D efforts
Nokia is one of the largest telecommunications equipment makers in the world. It recently opened a first-of-its-kind 6G Lab in India. The lab will be its research hub for accelerating the development of foundational 6G technologies such as Network as a Sensor, Network Exposure, and Automation. The company assures that these layoffs and strategic decisions will not affect its R&D capacity and commitment.
A slowdown in 5G deployment in Nokia’s major markets, including India and the US, affected its earnings this past quarter. “We saw some moderation in the pace of 5G deployment in India which meant the growth there was no longer enough to offset the slowdown in North America,” Nokia CEO Pekka Lundmark said in a statement. It remains to be seen whether the plans work effectively to improve Nokia’s earnings in the coming years.