Nokia Siemens to Slash Workforce and Reorganize Around New Units
Following its disastrous quarterly results, Nokia Siemens (NSN) has announced a sweeping cost reduction and restructuring program, which could see it lose almost 10% of its global workforce in a bid to save 500m a year in operating expenses and production overheads by 2011.
Focal Points:
- Among the savings will be the loss of 7% to 9% of its 64,000-strong workforce (up to 5,760 positions) plus cuts in spending on real estate, IT, site optimization and overall general and administratve expenses. "Despite having fully achieved the original merger integration savings objectives of Nokia Siemens Networks, changes in the global economy and competitive environment make further cost reductions necessary," the vendor said in a statement. Last month, co-parent Nokia announced a 908m write-down at the firm.
- NSN's restructuring has reduced its five divisions to three, each targeted at a specific customer base to improve the company's ability to understand and respond to different clients. The first unit is Business Solutions, headed by Jürgen Walter, currently head of the Converged Core division. The second is Network Systems for fixed and mobile infrastructure (including the Flexi base stations, core networks, optical transport systems and broadband access gear. This will be run by Marc Rouanne, currently head of the Radio Access business unit. Finally there is Global Services, under Ashish Chowdhary, currently head of the services business, which are seen as the chief driver of growth and recovery in the next few years. The new structure takes effect on January 1 2010.
- Incoming CEO Rajeev Suri added that the firm also aims to extend its range of partnerships in order to target new markets and introduce new services more flexibly and cost effectively. Acquisitions may also be in order - the statement said NSN will "target assets that enhance the scale of existing product and service business lines and that deepen relationships with key customers". A recent example of the type of alliance NSN will seek is the partnership with Juniper for Carrier Ethernet transport systems.
Editors Note: Indications that the economic recession is still in full swing. IT executives still need to be vigilant in terms of their strategic partnerships with all vendors to make sure that they are financially sound and that the vendors are still following their product/service roadmaps that you have relied on to make your partnership decisions.