Nearly 1 out of every 4 Nokia Siemens Networks employees to be let go by the end of 2013

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Nokia Siemens Networks has just announced that they plan to fire 17,000 people by the end of 2013; that’s 23% of their workforce according to Bloomberg. “These planned reductions are regrettable but necessary,” says Rajeev Suri, the CEO of NSN. The goal is to cut $1.3 billion in annual expenses and to put a laser focus on wireless broadband. That means throwing the fixed line business away, though no specific business units were actually mentioned. How the cuts will be split geographically has yet to been determined either, but one should note that the company’s headquarters are in Finland, along with 7,000 employees, while another 10,000 employees are based in Germany. This does not bode well for the European economy. Also of note is that NSN took over Motorola’s networking operations back in April of this year, bringing in roughly 7,500 employees. That puts this announcement into some context.

So how well is NSN doing anyway if they have to cut this many people? As of today they share the title of the world’s third largest vendor of mobile infrastructure vendor with Alcatel-Lucent; they both have around 13.2% market share. The leader is of course Ericsson, who has 34% market share, and then Huawei, with their 15.6% share. The thing is though, NSN made only $254,000 in sales per employee last year, which is 19% less than what Ericsson did during the same time frame. In other words, NSN isn’t as efficient.

While it’s sad to see people losing their jobs, these kinds of measures are due to innovations that have been taking place over the past few years, which caused pricing battles as operator’s have been upgrading their networks. Wireless infrastructure is only going to become more important as time goes on, which means further penny pinching, and more jobs cuts. Bottom line be damned, but that’s the sad state of affairs. The people who build the technology that makes the iPhone, Galaxy Nexus, and Lumia 800 more than just a pretty paperweight get no love.

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