Nokia will eliminate about 7,000 jobs as part of a cost-cutting an restructuring programme that was hinted at by CEO Stephen Elop in February this year.
Nokia signed a strategic partnership with Microsoft in February this year, and which was formalised last week. Under software the partnership, Nokia will phase out its OS for smartphones, Symbian, and move to Microsoft’s Windows Phone software.
Elop, a previous employee at Microsoft, said the cuts and reorganisation were needed to prepare for the partnership with Microsoft.
Nokia said the reductions would be achieved by eliminating 4,000 jobs, mostly in Britain, Denmark and Finland. Another 3,000 employees working on its Symbian operating system would be moved to technology consultancy Accenture.
Nokia’s profits had registered a drop of 16% in the fourth-quarter last year.
Increasingly, the high-end and midrange smartphone markets are being captured by Apple and Google’s Android OS run smartphones.
Nokia has failed to make an impact in the large and profitable North America market. Meanwhile, in the low-end hand-set market, Nokia’s profits have dipped following the entry of less-expensive Asian alternatives.
Earlier this year, Elop had indicated that Nokia may witness a major overhaul. In an internal memo of the company, Elop wrote, "Nokia, our platform is burning. It will be a huge effort to transform our company."
Now, announcing the job cuts Elop said, "With this new focus, we also will face reductions in our work force."
"This is a difficult reality, and we are working closely with our employees and partners to identify long-term re-employment programs," he added.
Elop also said that there would be no further job losses saying the restructuring announcement was the "full plan for as far as we can see into the future."
At the end of 2010, the Finnish company had 59,080 employees. Its deal with Microsoft is expected to cut costs by about 1bn euros a year.
Finland faces 1,400 job cuts, but unions there said they had expected worse.
The Union of Professional Engineers in Finland chairman Pertti Porokari said, "This went slightly better than expected, because Nokia transfers Symbian development."
"These 1,400 people to be laid off are mainly MeeGo coders and they should have quite good chances to find new jobs," he added.
However, unions in the UK were unhappy.
Unite assistant general secretary Tony Burke said, "This is another dark day for the British economy."
"What is very disheartening is that mobile phones and their associated technology are one of the growth areas in the British economy, yet this still does not stop a successful company such as Nokia throwing people out of work."
Nokia has a global manufacturing network stretching from Latin America (Brazil and Mexico) to Europe (Finland, Hungary, Romania and the UK) and Asia (China, India and Korea).
Nokia has said that it will set up a new manufacturing site near Hanoi in northern Vietnam in 2012, with an initial investment of approximately EUR200m.
