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November 4, 2009

Nokia Siemens on €500m cost cutting drive

Plans to layoff 7-9% of workforce, reorganise business

By CBR Staff Writer

Nokia Siemens Networks (NSN) has announced its plans to reduce its annualised operating expenses and production overheads by €500m by the end of 2011, in a move to improve its financial performance and return to growth.

The company said that it will also conduct a global personnel review which may lead to headcount reductions in the range of about 7-9% of its current approximately 64,000 employees. 

In addition to the operating expense and production overhead savings, NSN said that it will target an annual reduction in product and service procurement costs related to cost of goods sold that is substantially larger than the targeted €500m in operating expenses and production overhead reductions.

NSN’s plans also include reorganising its business units to better align with customer needs; ongoing purchasing savings; expanded partnering to ensure a full portfolio of products and services; and potential acquisitions where assets would add scale to existing product areas or customer relationships. Five business units are planned to be realigned into three, each targeting a specific customer focus area.

The planned new business units, which are expected to come into effect on January 1, 2010, include Business Solutions, which will focus on helping customers generate new revenue and differentiate from the competition; Network Systems unit that will focus on providing both fixed and mobile network infrastructure; and Global Services unit that will focus on helping customers improve operational efficiency through outsourcing of their non-core activities and supporting and managing their networks,  the company said.

The company said that Jurgen Walter,  Marc Rouanne and Ashish Chowdhary will head the Business Solutions, Network Systems and Global Services business units respectively. Rouanne and Walter to join the company’s executive board, effective January 1, 2010.  

Mika Vehvilainen, chief operating officer of Nokia Siemens Networks, said: “We recognise that we are operating in a market where customer needs are evolving fast. We see acquisitions and expanded partnering as important tools to help meet these needs in the fastest, most efficient way possible.”

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