Nokia Siemens Network(NSN) is planning to fire almost 17000 employees worldwide, that becomes nearly 23 percent of its total workforce, in order to cut its costs by € 1 Billion (one billion Euros).
The finnish based – Nokia – and German Multinational company – Siemens – have been working together as a Joint Venture since 2006. The Nokia Siemens Network is the world’s second-largest maker of mobile phone network equipment. But for quite sometime now, the joint venture has been facing low profits. Therefore, some bold measures are now being taken, as a part of restructuring the company to compete against its new Asian rivals.
As far as we know, Chinese companies like Huawei and ZTE have become a tough rivals of Nokia Siemens. The said chinese companies have won the Asian business significantly, by providing cheap hardware and competent technology in the market.
NSN now sees its future in mobile broadband and services and aims to become an undisputed leader in these areas. Rajeev Suri, C.E.O NSN, described the lay off plan as regrettable but quipped, “As we look towards the prospect of an independent future, we need to take action now to improve our profitability and cash generation,”.
Confirming this news even more, a German Magazine reported today that Chief Executive of NSN has sent a letter to its 9000 employees in Germany. The employees were informed by the CEO not to expect money from NSN’s parent companies Nokia and Siemens. The letter also read:
“Our profitability is still too low, we’re burning cash reserves, have too many business areas that have never produced adequate returns and regions that have always been loss-making,”
After learning about these developments, it seems the layoff plan is on its way and we can also hear about major re-shuffle in the top hierarchy. The news, although, is bad for the NSN employees but it was welcomed by the share holders, as Nokia shares jumped more than 2% on the news.