Embattled cell phone giant Nokia Wednesday announced it will cut 7,000 jobs as a result of its Microsoft Windows Phone agreement and outsourcing its Symbian handset software. The cuts represent 12 percent of the company’s handset employees and could save Nokia $1.46 billion.
“The competitive environment has changed rapidly,” explained Nokia CEO Stephen Elop. The cuts including 4,000 layoffs and 3,000 jobs shifted to Accenture are just the latest move by Nokia. It recently inked a deal supporting Microsoft’s Windows Phone software instead of Symbian. Additionally, Apple recently was pegged as the largest mobile phone company, in terms of revenue, causing Nokia to be the largest handset maker in only volume. The former Microsoft executive Elop was hired about a year ago in a bid to make the Finnish company more competitive with Apple’s iPhone.
Accenture, a services company, will now support Symbian software as well as future Windows Phone handsets. The outsourcing deal is expected to save Nokia 1 billion euros, representing 18 percent of its annual research and development costs. The outsourcing also avoids more costly severance packages required by out-and-out layoffs.
“This is about keeping focus within Nokia on Windows Phone,” Gartner analyst Carolina Milanesi told Reuters.
Although the announcement sent Nokia shares 3 percent higher, the move prompted one key services supplier — Tieto — to fall by more than that amount.
[Reuters]
