Nokia told reporters it would outsource some of its IT operations to two Indian IT suppliers, HCL Technologies and Tata Consultancy Services, India’s largest software exporter.
The news comes just a week after the Finnish handset maker made some optimistic remarks regarding its financial performance in the fourth quarter. The coming year promises a further push for cost savings, continuing the initiatives laid down in a cost-cutting plan in June which targeted both third party savings and severe job cuts.
The company has since been struggling to cut costs fast enough to keep up with a rapid drop in phone shipments. In the fourth quarter 2012, Nokia shipped 86.3 million phones, down from 113.5 million units the same quarter 2011.
The company believes this latest move will “increase operational efficiency and reduce operating costs” by making the IT sector an appropriate size for Nokia’s current operations.
As part of the deal, some 820 Nokia employees, most of them based in Finland, will be transferred to HCL and Tata. Also, the company plans to reduce the total size of its Finnish IT operations by up to 300 employees.
Nokia says the deal signals the beginning of a productive partnership because the two Indian companies have local presence in Finland, and “will be supporting Nokia on a long-term basis”.
The president of Trade Union Pro voiced concerns that Nokia was outsourcing its layoffs, comparing the move to the Finnish company’s decision in 2011 transfer around 3,000 employees to Accenture, with 1,200 employees moved to the consulting giant’s payroll in Finland. When Accenture subsequently scaled down operations in Finland, resulting in former Nokia employees being laid off.
“They [former Nokia employees] stood on the gallows with the nooses around their necks until their new employer did it the dirty work and officially laid them off,” Antti Rinne, president of Trade Union Pro is quoted saying in a press release following the news.
