Nokia outsources IT functions, more than 1000 employees affected

The company wants to reduce operating costs as its struggles continue

Nokia is planning to transfer up to 820 employees to HCL Technologies and Tata Consultancy Services and lay off up to 300 people as the company reorganizes its IT organization.

The goal is to reduce operating costs and create an IT organization "appropriate for Nokia's current size and scope," the company said in a statement on Thursday.

The majority of the employees affected by the changes are based in Finland, according to Nokia.

The day-to-day operations of Nokia's internal IT infrastructure will move to HCL, which has provided Nokia's IT service desk since 2009, a Nokia spokeswoman said via email.

HCL has entered into a long-term agreement with Nokia that includes data center, network management, end user computing services and service management, it said in a filing to the Bombay Stock Exchange.

Employees planned to be transferred to Tata work on the development of ongoing internal applications and services, according to Nokia.

The company also said the changes will have no impact on the development of software and applications for any of its products and are not expected to have any impact on consumers.

As Nokia's struggles continue, the company is doing its best to keep costs down, and hang on to its remaining stash of cash. At the end of the third quarter last year the company had ¬3.56 billion (US$4.73 billion) in net cash, compared to ¬5.07 billion a year earlier.

The changes announced on Thursday are the last anticipated reductions as part of an announcement Nokia made in June. At that time it said the company would reduce the number of employees by up to 10,000 globally by the end of 2013.

The news comes as Nokia last week announced some preliminary fourth quarter results, saying its Windows Phone-based Lumia smartphones had performed better than expected with sales at 4.4 million units.

That number is a step in the right direction for Nokia, and how it performs in the next 12 months will be key for its future, Pete Cunningham, principal analyst at Canalys, said at the time.

Nokia will report its full fourth quarter results on Jan. 24.

Send news tips and comments to mikael_ricknas@idg.com

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Tags business issuespersonnelTata CommunicationslayoffsTCL CommunicationNokiarestructuring

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Mikael Ricknäs

IDG News Service
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