Nokia has announced it plans to streamline its IT organisation in order to "increase operational efficiency and reduce operating costs". As a result of the planned changes Nokia will transfer certain activities and 820 employees to HCL Technologies and TATA Consultancy Services. In addition 300 jobs will be lost. In both cases the majority of employees affected by these changes are based in Finland.

Nokia says the changes to its IT organisation "are the last anticipated reductions as part of Nokia's focused strategy announcement of June 2012". The 10,000 job losses and factory closures announced last summer were a consequence of the broader strategy change, the central pillar of which was a shift to Windows Phone for smartphones, undertaken by Stephen Elop, Nokia's CEO, after he joined the company in October 2010.

It's significant that Nokia has labelled the IT organization job losses as the "last anticipated reductions" because it appears Nokia has been able to implement the cost cutting and strategy changes more quickly than expected. Previously Nokia stated that the job losses would be complete by the end of 2013, it now appears that they will be complete by mid 2013.

The changes in the IT organisation reflect the reduce scale of Nokia. As a result of falling device sales and market share Nokia has been obliged to rescale the company (i.e. execute operations around a smaller set of sales). This has inevitably meant job losses, office closures and restructuring. As such, Nokia's IT organisation can be seen as a microcosm of the company as a whole.

The job losses and restructuring process has been expensive (e.g. €454 million in Q3 2012). It is primary reason that, despite returning to underlying profitability in the Devices & Services division (i.e. non-IFRS figures), Nokia is still likely to report a financial loss for Q4 2012 next week, and is still burning through its cash reserves. However, it also fair to point out that the losses would be greater if not for platform payments from Microsoft and an improved return on the company's IPR portfolio in the last 12 months.

From the press release:

 Nokia outlined a range of planned changes today to streamline its IT organization. Nokia believes these changes will increase operational efficiency and reduce operating costs, creating an IT organization appropriate for Nokia's current size and scope.

As part of the planned changes, Nokia plans to transfer certain activities and up to 820 employees to HCL Technologies and TATA Consultancy Services.

Nokia also plans to reduce its global IT organization by up to 300 employees. Nokia will offer employees affected by these planned reductions both financial support and a comprehensive Bridge support program.  These are the last anticipated reductions as part of Nokia's focused strategy announcement of June 2012.

The majority of the employees affected by these planned changes are based in Finland. Nokia is beginning the process of engaging with employee representatives on these plans in accordance with country-specific legal requirements.