Savings from the restructuring will also finance a move into cloud networking.
Nokia announced this week that it plans to reset its cost base and invest in R&D and future capabilities including 5G, cloud and digital infrastructure.
The move will help Nokia invest into “other areas that will benefit Nokia in the long-term,” the company said.
In October 2020 Nokia announced a new operating model they said would better position the company for changing markets and align with customer needs. The new model promises to deliver better accountability and transparency, they said, as well increase simplicity and improve cost-efficiency.
“Nokia now has four fully accountable business groups. Each of them has identified a clear path to sustainable, profitable growth and they are resetting their cost bases to invest in their future,” said Pekka Lundmark, President and CEO.
“Each business group will aim for technology leadership. 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,” Lundmark continued.
Restructuring and streamlining mean fewer employees needed
The company’s strategic goals over the next few years are to first lower cost base of approximately EUR 600 million by the end of 2023. These savings will take place gradually, they say, and will offset increased investments in R&D, future capabilities and costs related to salary inflation.
Additional long-term benefits Nokia plans include streamlining its portfolio and reducing site fragmentation.
Nokia says these restructuring plans will result in an employee organization of 80,000 to 85,000 people. This represents a sharp reduction from the approximately 90,000 employees Nokia has today. The exact number will depend on market developments over the next two years, according to the company.
“Decisions that may have a potential impact on our employees are never taken lightly. Ensuring we have the right setup 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,” said Lundmark.