In its effort to reduce costs due to declining demand, the Finnish technology company Nokia is set to lay off 14,000 employees. This move comes in the wake of decreased sales of next-generation 5G equipment.

Nokia, along with its competitor Ericsson, is striving to boost its sales in India, even though this market offers lower profit margins. This endeavor is a response to the slowing demand in countries like the United States.

Pekka Lundmark, the CEO of Nokia, characterizes the market situation as extremely challenging. He details that their net sales in their most critical market, North America, dropped by 40% during the third quarter.

Nokia has set a target to achieve savings of approximately 800 million to 1.2 billion euros by 2026, in alignment with their plan to attain a long-term operational margin of at least 14%. To meet this target, Nokia also plans to reduce its workforce from 86,000 to 72,000-77,000 employees, representing a job cut of about 16% at the highest level.

Lundmark declined to provide further details but emphasized the need to consult with employee representatives. Nevertheless, he expressed a commitment to safeguard research and development.

Nokia expects to save at least 400 million euros in 2024 and an additional 300 million euros in 2025.

Meanwhile, Ericsson, which has also conducted layoffs of thousands of employees this year, stated that the uncertainty affecting their business will persist until 2024. Nokia, too, faces similar uncertainties, but they anticipate a more normal seasonal improvement in their network business in the fourth quarter of 2023. The company does not cut its full-year projections.

Lundmark emphasized that, despite their continued belief in the medium to long-term market, they will not sit idle and hope for a swift market recovery. He also acknowledged that there is currently no certainty regarding when the market will recover.