The telecoms company plans to cut costs by around €600m in the next two years to offset increased investments in R&D.
Finnish telecoms giant Nokia has announced a massive restructuring plan that could result in up to 10,000 job losses.
The company said in a statement that it expects to lower its cost base by approximately €600m by the end of 2023. These savings will allow Nokia to invest in R&D and future capabilities such as 5G, cloud and digital infrastructure.
As part of the restructure, the company is expected to reduce its employee headcount from its current number of 90,000 to between 80,000 and 85,000, potentially resulting in up to 10,000 job losses over the next 18 to 24 months.
Nokia said the cost-cutting measures will take place gradually and it expects total restructuring and associated charges of between €600m and €700m, of which 50pc is expected in 2021.
In October last year, the company announced a new operating model designed to better position the company for changing markets, creating four business groups.
Nokia’s president and CEO, Pekka Lundmark, said each of these groups is “resetting their cost bases” in order to identify a clear path to profitable growth.
Lundmark took over as CEO in September last year after it was announced that Rajeev Suri would step down from the top role.
At the time of the announcement, The Financial Times suggested that the leadership change was a necessary move for Nokia to continue competing against China’s Huawei and Sweden’s Ericsson in the 5G race.
The latest restructuring plans highlight the company’s commitment to investment in 5G R&D, as the statement said Nokia’s Mobile Networks group aims to be “the indisputable top in wireless mobility networks”.
However, Lundmark said decisions that may have a potential impact on employees are never taken lightly.
“Ensuring we have the right set-up and capabilities is a necessary step to deliver sustainable long-term performance. My priority is to ensure that everyone impacted is supported through this process,” he said.