As part of its strategy announced back in June 2012, Nokia has cut 300 jobs and outsourced up to 820 more with Indian outsourcing giants Tata Consultancy Services and HCL. These moves have been made in a bid by Nokia to align IT function with its business focus.
Nokia has said that it will offer employees affected by these planned reductions both financial support and a comprehensive Bridge support program. The program has been created by Nokia to fund laid off workers’ ideas for new businesses. Employees under the Bridge support program get €25,000 to start off with and there is a possibility of the funding going higher.
These layoffs are supposed to be the last anticipated reductions as part of Nokia's focused strategy announcement of June 2012 and come just in time for the company to report Q1 results on January 24.
In June, the jobs that were cut belonged to operations in Canada and Germany. This time, majority of the employees affected by these planned changes are apparently based in Finland. Nokia has said in its press release that it is beginning the process of engaging with employee representatives on these plans in accordance with country-specific legal requirements.
“Nokia believes these changes will increase operational efficiency and reduce operating costs, creating an IT organization appropriate for Nokia's current size and scope,” said Nokia in the press release.
The Finnish company that once had an unprecedented hold over the mobile phone market seems to have lost its steam in the past few years that saw the rise of Android and iOS. Nokia’s device sales have been in a free fall in the past few years and the sales of the Windows Phone Lumia handsets have barely managed to bump the falling graph upward.
While Nokia says that this is the last in line of layoffs for a while, the company might see some more cost cutting in order to reduce overall costs and save on money. According to a TechCrunch report, since CEO Stephen Elop took over, Nokia has in total laid off nearly 16,000 people in its mobile and location division and has only around 44,600 employees working in it presently.
Back in June last year, Nokia cut down around 10,000 jobs in Canada and Germany as cost cutting measures. “These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength,” Elop had said back then, adding, “We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities.“
Elop had also drawn attention to the fact that Nokia planned on tirelessly pursuing Lumia sales while the company put emphasis on location-based services.
In further action to help improve its state, the company had also agreed to terms for EQT VI, part of the leading private equity group in Northern Europe, to acquire Vertu. Nokia’s Vertu brand had been one of the global leaders in luxury mobile phones for a long time.
While Nokia is still coming to terms with being humbled by having to cut corners this way, the one question everyone is asking is whether Nokia bet too heavily on Windows Phone and Lumia. Will this be its undoing?