Nokia Siemens Networks has announced plans to cut 17,000 employees around the world by the end of 2013, including about 4,000 mainland Chinese employees.
This is reportedly the largest layoff in the history of Nokia Siemens. According to the company, it had about 74,000 employees worldwide by November 1, 2011, which means one out of five employees will be cut. This new measure will reportedly save EUR1 billion in operating and manufacturing costs for the company.
Rajeev Suri, chief executive officer of Nokia Siemens, revealed the strategic adjustment during a conference call and said they are very unhappy with the current profit trend for the company. The telecom infrastructure industry is not a high return business anymore.
Apart from the layoffs, Nokia Siemens will also make adjustments to real estate, information technology, and joint venture structures, aiming to reduce expenditures across the board.
Since the founding of Nokia Siemens five years ago, the company has steadily been losing money. Its financial report for the third quarter of 2011 stated that based on non-International Financial Reporting Standards, Nokia Siemens' operating profit was EUR6 million. However, the profit was mainly contributed by its acquisition of the solutions network assets of Motorola.
Though Nokia Siemens refused to reveal its detailed layoff plans in different countries, rumors are spreading that 4,000 employees in China will be affected. Nokia Siemens' layoff plan in China may reportedly target employees transferred in the previous acquisition of business of Motorola.
Nokia Siemens implemented several layoffs before. In 2008, the company cut about 1,820 employees in Finland and Germany; in 2009, it cut about 6,000 employees worldwide due to the financial crisis; at the end of July 2011, it cut 1,500 employees, including 240 Chinese positions from manufacturing, service, sales and functional departments.