Finnish telecommunications giant Nokia has announced plans to cut between 9,000 and 14,000 jobs by the end of 2026 as part of an effort to reduce costs. This decision comes after the
company reported a 20% decrease in sales during the period between July and September.
The decline in demand for 5G equipment in markets, particularly North America, was cited as the primary reason for the job cuts. Nokia, with a current global workforce of 86,000 employees, has been reducing its workforce through multiple job cut rounds since 2015.
The company aims to achieve cost savings ranging from €800 million to €1.2 billion (£695 million to £1 billion) by 2026. High inflation and interest rates have led to customer spending cutbacks.
Nokia's CEO, Pekka Lundmark, noted that "advances in cloud computing and AI will require significant investments in networks that have vastly improved capabilities." However, due to the uncertain market recovery timeline, the company is taking decisive action.
Nokia intends to expedite the cost-cutting process by saving €400 million in 2024 and €300 million in 2025. While the company anticipates improvements in its network businesses in the current quarter, it has not disclosed the locations of the job cuts or whether they would affect UK employees.
Nokia characterized the job cuts as a "necessary step to adjust to market uncertainty and protect our long-term profitability and competitiveness." A company spokesperson emphasized support for affected employees, initiating the consultation process for the initial reductions.
The final job cut details will depend on evolving end-market demand, with the timing yet to be decided. Nokia, once a leading mobile handset manufacturer, shifted focus to telecoms equipment after selling its handset business to Microsoft.
While it became a major 5G equipment provider in the UK, Nokia's 5G equipment business has suffered from spending reductions by operators in the US and EU. The telecom industry, which should be thriving, faces challenges related to operator relevance and future sustainability.
These issues have affected technology companies more broadly, including telecommunications, as customer spending diminishes due to factors like inflation and increased interest rates. Tech workers remain in demand, with many finding new employment within three months of job loss. Photo by pikkuanna, Wikimedia commons.