Finnish telecommunications giant Nokia recently announced it would lay off between 9,000 and 14,000 workers by the year 2026. The company’s sales dropped by 20% from July to September, prompting the decision. Nokia says this is because demand for 5G infrastructure is falling in key regions like North America. The company plans to save between €800 million and €1.2 billion (£695 million and £1 billion) on expenses by 2026. Nokia’s CEO, Pekka Lundmark, is confident that the company’s network businesses will improve despite the skepticism surrounding the market recovery. However, details about the layoffs’ impact on UK workers and where exactly they will take place have not yet been made public.
History and Problems in the Market
Nokia, once the leading handset manufacturer worldwide, saw its market dominance erode as a result of its inability to foresee the meteoric rise in popularity of internet-enabled touchscreen phones such as the iPhone and Galaxy. After selling its handset division to Microsoft, Nokia pivoted to a focus on telecoms equipment, specifically the software and hardware that powers telecommunications networks. Nokia’s partnership with BT in 2020 propelled the company to prominence in the UK’s 5G market. Nokia, like its Swedish competitor Ericsson, has struggled as operators in the United States and the European Union have reduced spending on 5G infrastructure. The company’s revenue has also been hit by the sluggish rollout of 5G in India.
How Nokia Is Trying to Save Money
In light of these market pressures, Nokia has made the tough decision to reduce its workforce and implement cost-cutting measures. The company has set savings goals for 2024 and 2025 of €400m and €300m respectively. These measures are being taken because they are necessary for maintaining long-term profitability and competitiveness in an uncertain market. Nokia emphasizes the need for these changes to align with market conditions while recognizing the talent of its employees. The company has begun holding meetings to discuss the layoffs, the timing and specifics of which will depend on how the end market demand develops.
Prospects and Implications
The telecoms industry, which ought to be thriving due to the ever-increasing demand for its services, is instead confronted with obstacles that call into question the continued viability and importance of operators. Nokia’s CEO, Pekka Lundmark, is optimistic about the company’s network businesses despite the current climate. However, when exactly the market will begin to recover is still unclear. Nokia’s cost-cutting measures, while necessary, are indicative of the difficulties all tech companies face as consumer and commercial spending decreases. Technology workers are in high demand despite the grim outlook, with many finding new positions within three months of losing their previous ones.
See first source: BBC
Why is Nokia planning to lay off thousands of workers?
Nokia is implementing workforce reductions due to a 20% drop in sales from July to September, primarily caused by falling demand for 5G infrastructure in key regions like North America. The company aims to save between €800 million and €1.2 billion in expenses by 2026.
What is the timeline for these layoffs, and how many workers will be affected?
The layoffs are expected to be completed by the year 2026. The exact number of affected workers may range from 9,000 to 14,000, although specific details about the impact on UK workers and locations have not been disclosed.
What challenges has Nokia faced in the telecoms market?
Nokia, once a leading handset manufacturer, faced challenges in adapting to the rise of internet-enabled touchscreen phones like the iPhone and Galaxy. After selling its handset division to Microsoft, Nokia focused on telecoms equipment, but it has struggled due to reduced spending on 5G infrastructure in the United States and the European Union and slow 5G rollout in India.
How is Nokia planning to save money amidst market pressures?
Nokia has set savings goals for 2024 and 2025, aiming to save €400 million and €300 million, respectively. These cost-cutting measures are deemed necessary for long-term profitability and competitiveness, aligning with market conditions while recognizing employee talent.
What are the prospects for the telecoms industry, and how is Nokia’s CEO, Pekka Lundmark, approaching the challenges?
Despite current market challenges, Pekka Lundmark, Nokia’s CEO, is optimistic about the company’s network businesses. However, the timing of the market’s recovery remains uncertain. Nokia’s cost-cutting measures reflect the broader difficulties faced by tech companies as consumer and commercial spending decreases.
What are the employment prospects for technology workers in the current climate?
Technology workers remain in high demand despite the challenging outlook, with many finding new positions within three months of losing their previous ones. The tech industry continues to evolve, creating opportunities for skilled professionals.
Featured Image Credit: Isaac Smith; Unsplash – Thank you!