So the big buzz in the telecoms industry is that Nokia Siemens is laying off 23% of its workforce to cut costs and recover from their losses. They aim to declare an IPO to save the company that has been running on losses from the very beginning.
This could be a risky move considering all that is at stake here. Firstly, they’re letting go of trained labor and high skill that may be difficult to recruit again. Secondly, firing 17,000 employees is obviously going to cause some tension within the company. Remaining employees may lose their sense of security and may be demotivated/disappointed/intimidated, resulting in inefficiency, perhaps? Also, there’s a high chance Nokia Siemens gets bad PR out of this announcement. However, there’s a way they can make these lay offs without appearing as the villain. The company can provide severance packages to their employees to make up for the trouble caused. But then again, this is costly on a short term basis.
On the bright side, they save about a billion euros in doing so. And the shares went up 2% to 4.27 euro since the announcement. This could be a good opportunity for Nokia Siemens to maintain better cash flow and save the company. As long as they take care of their human resource and organizational structure, that is!
