NSN sharpens axe; 6,000 heads on the block

Infrastructure vendor Nokia Siemens Networks (NSN) said Tuesday that almost 6,000 staff face the axe as it seeks to reduce annualised operating expenses and production overheads by €500m by the end of 2011.

The plan will also see a company wide overhaul of business units, resulting in a reduction from five departments to three.

The new business units, which are expected to come into effect from the start of 2010, are: Business Solutions, which will focus on end user services, billing and charging, convergence and subscriber data; Network Systems, which will focus on both fixed and mobile infrastructure, including optical transport systems and broadband access equipment; and Global Services, which will focus on outsourcing and network management.

The company said that despite having fully achieved its original merger integration savings, “changes in the global economy and competitive environment make further cost reductions necessary.” NSN estimates that total charges associated with these reductions will be in the range of €550m over the course of 2010-2011.

The operating expense and production overhead savings are expected to come from a wide range of areas, including real estate, information technology, site optimisation, strategic workforce rebalancing, and overall general and administrative expenses, which means between seven and nine per cent of its current approximately 64,000 employees face redundancy. Disruption to customer-facing sales positions is expected to be limited, NSN said.

The company said it will also seek to further strengthen its business through partnerships and acquisitions, such as it has with Juniper Networks in the Carrier Ethernet transport arena, and
will pursue acquisitions when assets are available.

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