Nokia, a major telecommunications equipment manufacturer, announced last Thursday that the company is preparing to cut as many as 14,000 jobs as part of its effort to reduce costs due to a decrease in third-quarter sales and profit.
In a recent business filing, Nokia announced that the company would be launching a cost-saving program to “lower its cost base on a gross basis.” As part of the company’s new cost-saving program, Nokia is expected to reduce its workforce from 86,000 employees worldwide to between 72,000 and 77,000 employees, which the company said would result in a 10-15% “reduction in personnel expenses.”
According to The Associated Press, Nokia, a Finland-based technology company, is currently one of the world’s top suppliers of 5G wireless networks. The company’s announcement of mass layoffs comes at a time when Nokia is trying to “navigate the current market uncertainty” as high-interest rates impact the global economy.
The Associated Press noted that Nokia’s third-quarter sales dropped 20% compared to the third quarter of last year, resulting in a significant decrease in revenue. The company’s mobile networks business dropped 24% due to decreased sales in the North American market, where the company currently employs roughly 10,500 people, according to the company’s website.
“We continue to believe in the mid-to-long-term attractiveness of our markets,” Nokia CEO Pekka Lundmark said. “Cloud computing and AI revolutions will not materialize without significant investments in networks that have vastly improved capabilities.”
According to The Associated Press, Nokia’s decreased sales were caused by telecom operators placing additional investments on hold as a result of increased costs and interest rates. Lundmark noted that the issue was market-wide and that the company’s competitors also faced the same challenge in the current global economy.
“Investments by operators have reduced remarkably,” Lundmark said. “Perhaps the most serious situation prevails in the North American market, which has a very critical effect to our total profitability.”
Due to the company’s decrease in revenue, Lundmark explained, “Cost-cutting is necessary so that we can secure our competitiveness and thus our future.” However, the CEO noted that the “most difficult business decisions” are the ones that impact people at the company, such as the upcoming layoffs.
“We have immensely talented employees at Nokia and we will support everyone that is affected by this process,” he said. “Resetting the cost-base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness. We remain confident about opportunities ahead of us.”