Finland’s Nokia has announced it is cutting 7,000 jobs worldwide through a combination of layoffs and outsourcing, and shifting Symbian software development activities to Accenture—which will mean transferring about 3,000 employees. The bulk of the layoffs will be complete by the end of 2012, and will mostly take place in Britain, Denmark, and Nokia’s native Finland.
“At Nokia, we have new clarity around our path forward, which is focused on our leadership across smart devices, mobile phones, and future disruptions,” said Nokia’s newly-installed president and CEO Stephen Elop, in a statement. “However, with this new focus, we also will face reductions in our workforce. This is a difficult reality, and we are working closely with our employees and partners to identify long-term re-employment programs for the talented people of Nokia.”
The announcement comes on the heels of Nokia finalizing its agreement with Microsoft that has the company focusing all its smartphone development efforts on Microsoft’s Windows Phone platform, sacrificing its own Symbian platform and the nascent open source MeeGo platform (developed in partnership with Intel) in an effort to become a relevant force in a mobile phone market now dominated by smartphones. Nokia is still the world’s largest manufacturer of mobile phones; however, the bulk of those devices are entry-level “feature phones” sold into developing markets, rather than the high-margin smartphones coveted by both mobile operators and consumers. Nokia has been leapfrogged by the likes of Apple’s iOS and Android in the smartphone market, and has all but withdrawn from key mobile markets, including the United States.
Under Nokia’s restructuring plan, no Nokia employees will lose their jobs during 2011; instead, the changes will be made “over time,” with the company launching a comprehensive social responsibility program for outgoing employees and the communities likely to be impacted by the layoffs. Nokia has over 130,000 employees worldwide. Industy watchers had been expecting the company to announce job cuts this month.
Part of Nokia’s strategic shift is sending its Symbian OS out to pasture: as part of the restructuring, Nokia will be shifting responsibility for ongoing Symbian development as well as support services to Accenture, along with about 3,000 Nokia employees. The companies expect to work out all the details of the agreement by summer 2011, with the employees to be transitioned by the end of 2011. The agreement also calls for Accenture to work on mobility software and services for Windows Phone devices and “other ecosystem participants.” This isn’t the first time Nokia has shuffled businesses off to Accenture: the companies have collaborated since 1994, and in 2009 Accenture acquired Nokia’s professional services unit.
Nokia’s announcement of layoffs and significant business restructuring highlight the company’s all-or-nothing bet of shifting its mobile business to the Windows Phone platform. Although Windows Phone has yet to develop significant traction with consumers, industry watchers expect the platform will develop legs over time, particularly in corporate and enterprise environments that rely on Microsoft software and services. However, it remains to be seen whether Nokia can spark broader consumer interest in Windows Phone 7 devices—at this point, the smartphone revolution started by the iPhone in 2007 is well underway, and Nokia is only starting to lace up its boots.