Following the release of its Q3 results for the year, the Finnish company announced the Nokia layoffs 2023, which will see the termination of employment of up to 14,000 of its workers.
The renowned Finnish telecommunications giant and a major provider of 5G equipment explained that this initiative is part of a sweeping restructuring effort aimed at realigning the company’s operations, resulting in a targeted headcount ranging from 72,000 to 77,000 employees, down from its current roster of 86,000.
How will the Nokia layoffs 2023 affect the company?
The comprehensive restructuring endeavor of the Nokia layoffs 2023 is projected to yield substantial reductions in staffing expenses, anticipated to fall within the range of 10% to 15%. Moreover, it is expected to generate estimated cost savings of at least €400 million ($421.4 million) in 2024 alone. Over time, Nokia anticipates that these measures will lead to cumulative cost savings of up to €1.2 billion (nearly $1.3 billion) by the close of 2026.
Pekka Lundmark, the CEO of Nokia, expressed a profound understanding of the gravity of this decision, stating,
The most difficult business decisions to make are the ones that impact our people. We have immensely talented employees at Nokia, and we will support everyone that is affected by this process. 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.
Nokia Q3 results 2023 show the reasons for the layoff
This significant announcement was made in conjunction with Nokia’s report on its third-quarter performance, which revealed results below expectations. Sales for the period experienced a notable dip of 15% compared to the corresponding period in the preceding year. This downturn was attributed to “macroeconomic uncertainty and higher interest rates,” which exerted pressure on operator spending. Particularly striking was the decline in mobile network sales, which plummeted by 19% in the third quarter. This was primarily attributed to a slowdown in the deployment of 5G technology, particularly evident in markets such as India.
This development echoes sentiments expressed by Nokia’s Swedish rival, Ericsson, which also cautioned that sales in the latter half of 2023 might fall below the usual figures. Ericsson cited a “challenging environment and macroeconomic uncertainty” as key factors contributing to this projection.
However, in spite of these formidable challenges, Nokia remains resolute in its outlook for 2023, projecting sales figures between €23.2 billion and €24.6 billion ($24.4 billion and $25.9 billion) for the full year. Lundmark emphasized the company’s steadfast belief in the long-term attractiveness of their markets.
In navigating these transitional waters, Nokia is making a calculated and forward-thinking move to adapt to the evolving industry landscape. This strategic restructuring is emblematic of the company’s commitment to maintaining its competitive edge in the face of ongoing market fluctuations, ensuring a robust and sustainable future for one of the telecom industry’s most iconic names.
The rationale behind the Nokia layoffs 2023 can be understood even further when the success of the competitors in the mobile network equipment and services. Notably, Elon Musk’s company Starlink has been rising among the competition in the field and promises a bright future for its investors. Check out how Starlink Direct to Cell text service is preparing to launch in 2024 to be on track with the industry if you’re interested.
Featured image credit: Pawel Czerwinski on Unsplash
