Nokia Siemens has formulated a cost reduction strategy, which could eventually result in 4100 job cuts in its home countries of Finland and Germany. The reason behind this controversial decision could be the growth of strong competition and weak demands in the market.
The joint venture is losing its market share and has not been able to reap profits due to extremely competitive and low pricing being offered by industry leader Ericsson and a handful of new Chinese entrants.
Declining economic growth has forced telecom companies to reduce their expenditure significantly. Analysts are of the opinion that all European vendors will have to a bit extra cautious and would need to try out every option at their disposal to reduce their cost structure.
The situation is challenging, which is apparent from the Ericsson's 50 per cent drop in quarterly profit last week, thus alarming telecom operators to remain careful of their spending patterns.
"The cost of a Swedish, German or Finish engineer is an order of magnitude higher than a Chinese one - this makes the threat from a rampant competitor like Huawei a very daunting prospect," said Ben Wood, head of research at CCS Insight, reports AFP.