STOCKHOLM – Nokia has announced a significant reduction in its workforce, laying off nearly 2,000 employees in Greater China, which accounts for about 20% of its local workforce. Additionally, the telecommunications giant plans to cut another 350 jobs across Europe as part of a strategic initiative aimed at lowering operational costs.
A spokesperson from Nokia confirmed that consultations have begun regarding the layoffs in Europe, although they did not provide further details about the situation in Greater China. As per Nokia’s latest annual report, the company employed approximately 10,400 people in Greater China and 37,400 in Europe as of December 2023.
The current job cuts are part of a broader cost-saving strategy that was previously outlined by the company. Last year, Nokia revealed plans to reduce its workforce by up to 14,000 jobs, aiming to save between €800 million and €1.2 billion by 2026. Sources familiar with the company’s operations suggest that these recent layoffs are essential to achieving those financial targets.
China has historically been a vital market for Nokia, once serving as its second-largest market globally. However, the company has faced challenges since 2019 when Western nations began imposing restrictions on Huawei, which negatively impacted business opportunities for both Nokia and Ericsson. In 2019, approximately 27% of Nokia’s net sales originated from Greater China. However, this figure has significantly dropped to under 6% in the most recent quarter, illustrating the rapid decline in market share.
Despite the layoffs, Nokia retains several offices in key locations within Greater China, including Beijing, Shanghai, Hong Kong, and Taiwan. These offices continue to service major clients, such as China Mobile, a significant player in the Chinese telecommunications market.
In its latest financial report, Nokia reported a 9% increase in operating profit for the third quarter. This boost in profit is primarily attributed to its ongoing cost-cutting measures. However, the company faced disappointment in net sales, which fell short of market estimates, resulting in a 4% decrease in its stock price. To date, Nokia has successfully achieved €500 million in gross savings through its restructuring efforts, according to the spokesperson.
During a recent conference call, CEO Pekka Lundmark expressed confidence in the company’s strategy, stating, “We are committed to reducing costs without sacrificing our research and development output. I am pleased with the pace of our cost-cutting initiatives and can confidently say we are slightly ahead of the schedule we set.”
When Nokia first announced the job cuts last year, it had a total workforce of about 86,000 employees. The objective is to reduce this number to between 72,000 and 77,000 by 2026. Currently, Nokia employs just over 78,500 individuals worldwide, reflecting the ongoing adjustments within the organization.
The restructuring process highlights the evolving dynamics within the telecommunications sector, where companies like Nokia must adapt to changing market conditions and increasing competition. As demand for traditional telecommunications services declines, Nokia is shifting its focus toward more innovative solutions and cost efficiencies to remain competitive.
Nokia’s decision to cut jobs comes at a time when the global market is experiencing significant transformations, driven by technological advancements and shifting consumer preferences. The company is investing in next-generation technologies, such as 5G and IoT, to position itself as a leader in the telecommunications space.
Despite the challenges, Nokia remains dedicated to maintaining its core competencies while navigating the complexities of a rapidly evolving market. The strategic layoffs are a necessary step in reshaping Nokia’s operational structure and ensuring its long-term sustainability in a highly competitive landscape.
As Nokia moves forward with these changes, the company aims to balance its workforce needs with its commitment to innovation and customer service. The layoffs may be painful for those affected, but they are part of a larger plan to create a leaner and more agile organization capable of meeting the demands of the future.