Nokia is cutting the workforce at its handset business by 7,000, or 12 per cent, following its landmark decision in February to attempt a fightback in the smartphone market by using Microsoft’s software.
About 4,000 Nokia employees face redundancy and a further 3,000 are due to transfer to Accenture, the consulting and technology services group, under an outsourcing deal.
Nokia has struggled to produce smartphones to match Apple’s iPhone and devices featuring Google’s Android software, and the Finnish handset maker is trying to revive its fortunes by using Microsoft’s Windows Phone operating system.
Nokia’s shares have fallen about 70 per cent since Apple launched the iPhone, which highlighted significant shortcomings with the Finnish company’s Symbian smartphone operating system. However, Nokia’s shares closed up 3.3 per cent at €6.20 on Wednesday after the company unveiled the planned job cuts.
Nokia’s partnership with Microsoft, which was finalised this month, is supposed to enable the Finnish company to reduce its operating expenses by €1bn ($1.4bn) over the next three years, partly because the US technology group will be responsible for development of Windows Phone.
Nokia plans to use Windows Phone as its main smartphone operating system from 2012, phasing out its use of Symbian most likely over the next two years.
The group said 4,000 employees at its handset business involved in research and product development face redundancy by the end of next year. The job losses will be spread across Nokia’s operations in Finland, Denmark, India, Romania, the UK and the US.
Development of its Symbian operating system will be outsourced to Accenture, the consulting and technology services group, with staff to be transferred by the end of the year.
Stephen Elop, Nokia’s chief executive, said the workforce reductions were a “difficult reality”, but stressed the company now had a clear direction.
The company is not planning further job reductions at its handset business, which had 59,080 employees at March 31.
The 1,400 Finnish job cuts were fewer than labour leaders had feared. But Markku Palokangas, an official at the white-collar Pro union, said the redundancies would have a “negative impact” on local economies with Nokia operations, such as Oulu and Tampere.
The 3,000 Nokia employees due to transfer to Accenture would initially work on Symbian software development and support services.
Accenture insisted it was “premature” to say whether some of the 3,000 could eventually lose their jobs, given Nokia will phase out its use of Symbian.