Nokia Siemens Networks has announced plans to slash 17,000 jobs from its workforce as part of an extensive global restructuring programme.
The company's plans to shed almost a quarter of its 74,000 staff will contribute to planned operating expense and production overhead savings of 1 billion (861 million) a year.
It will also support a strategy to focus on the end-to-end mobile network infrastructure and services market, with a particular emphasis on mobile broadband.
Rajeev Suri, chief executive of Nokia Siemens Networks, stated that the future of the telecommunications industry is in mobile broadband and services.
"And we aim to be an undisputed leader in these areas," he said. "At the same time, we need to take the necessary steps to maintain long term competitiveness and improve profitability in a challenging telecommunications market."
While the company was scant with details on where the job cuts would take place, it said locally led programmes at the most affected sites would provide re-training and re-employment support.
Other programme measures are expected to simplify organisational structure and processes, consolidate certain central functions, as well as office sites, and integrate Motorola's wireless assets. And business areas not consistent with the new strategy will be divested or streamlined.
Suri told analysts on a conference call about the announcement that the headcount reduction was "regrettable but necessary".
This is not the first time the company has cut jobs and reduced overheads since the joint venture officially started trading in 2007. In 2009 it cut nearly 6,000 from its workforce and targeted 500 million in savings.
In 2010 it bought most of Motorola's wireless network infrastructure. But that did not help its parent companies, Nokia and Siemens AG, avoid having to inject 500 million each into the 50:50 telco equipment venture less than a month ago.
Bettina Tratz-Ryan, Gartner research vice president, told IT Pro Nokia Siemens Networks was facing technology and market challenges at the expense of more agile and innovative rivals like Huawei and Ericsson.
"It has had to move from a market that sold proprietary hardware to one of off-the-shelf software and hardware solutions," she said. "And it has not developed end-to-end capabilities to serve it carrier customers with a complete solution set quickly enough."
Tratz-Ryan said plans to rationalise its organisation were also complemented by its reduced focus on fixed broadband in favour of mobile. "This is an industry in transition. For telecommunications companies, this has to be about building out not just the communications infrastructure for mobile networks alone. It was what they do with it," she added.
"The intelligence in the networks can be used to offer mobile device and security management services and help integrate IT models around cloud services for example, as well as network infrastructure provision."
