Nokia (NYSE:NOK) said it will slash 4,000 jobs and outsource its Symbian software activities to Accenture as part of its transition to using Microsoft's (NASDAQ:MSFT) Windows Phone 7 as its primary smartphone platform. The Symbian outsourcing deal also includes the transfer of about 3,000 additional employees to Accenture.
The job cuts, while expected, represent around 12 percent of Nokia's devices and services workforce. Nokia previewed the cuts last week when it reported first-quarter earnings and said it will cut $1.46 billion in operating expenses from its devices and services business for 2013, compared to 2010 levels.
Nokia said the majority of the job cuts will be in Denmark, Finland and the UK, and that, in accordance with country-by-country legal requirements, the company will begin discussions with employee representatives today. Nokia also plans to consolidate its research and product development sites so that each site has a clear role and mission. The company added that while some sites will close others will expand.
Nokia said all employees affected by the cuts can stay on the Nokia payroll through the end of 2011, and that it expects the job cuts to happen in phases through the end of 2012 as it ramps up development and production of Windows Phone devices. Nokia said it will offer re-employment and re-training support to affected workers.
"At Nokia, we have new clarity around our path forward, which is focused on our leadership across smart devices, mobile phones and future disruptions," Nokia CEO Stephen Elop said 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."
As part of the Accenture deal, employees located in China, Finland, India, United Kingdom and the United States will initially work on Symbian software activities for Nokia. Over time, however, Accenture and Nokia said they will try to retrain and redeploy the employees. The companies expect to complete the final agreement during the summer, and transition employees by year-end.
Accenture will provide mobility software, business and operational services around the Windows Phone platform to Nokia and other licensees. Under the proposed deal, Accenture will become a preferred partner for Nokia's smartphone development activities, as well as a preferred provider of services.
"The big surprise is Accenture," CCS Insight analyst Ben Wood told Bloomberg. "Nokia is moving quickly to transition Symbian out of the company in order to ensure complete focus on Windows Phone 7. This is the beginning of the long and painful journey."
- see this Nokia-Accenture release
- see this Nokia release
- see this WSJ article (sub. req.)
- see this Reuters article
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