Review of Nokia transferring 2,800 staff to Accenture

NEW STRATEGY: Nokia is outsourcing its Symbian software development to Accenture and transferring 2,800 workers to the firm as the Finnish handset maker pushes ahead with plans to introduce its first Microsoft Windows phone this year.

Nokia Corp has completed a deal to outsource its Symbian software development to Accenture, including the transfer of 2,800 workers to the global management-consulting firm.

The announcement came two months after Nokia disclosed the plan as part of its aim to cut costs by US$1.5bil by 2013, including 7,000 global layoffs, and catch up with top rivals in the tough smartphone market.

The Finland-based company faces strong competition from Research in Motion's Blackberry, Apple's iPhone and Google's Android, as it continues to see market share fall. Last month it issued a big profits warning.

Nokia's share price has plunged in recent months and recently has been trading at multi-year lows of around US$6.05.

Nokia said Accenture PLC will provide it with software services through 2016 with the personnel transfer expected in October when the deal closes. Half of the workers are based in Finland with another 1,400 in China, India, Britain and the United States.

Besides the personnel transfer, Nokia has said it plans to lay off 4,000 people by the end of next year, mostly in Denmark, Finland and Britain.

Another step
In another move to improve services, Nokia will integrate its NAVTEQ mapping unit with social location services operations to develop "a new class of integrated social location products and services for consumers."

The struggling company, which claims more than 1.3 billion mobile customers, said it wants to provide new products and support for bringing the Internet "to the next billion."

It said the plan includes to develop platform services and local commerce services for device manufacturers, application developers, Internet services providers, merchants and advertisers.
CEO Stephen Elop said that focusing on location and commerce was "a natural next step" for the company.

"We will provide next generation social-location applications and commerce to differentiate Nokia," Elop said. "We also aim to extend our content and services offerings to all consumers by making them available to partners and customers on a wide variety of devices and operating systems."

Since 1998, Nokia has been the biggest seller of cellphones, but in the first quarter of this year Apple overtook it as the world's top handset vendor in revenue terms - reaching sales of US$11.9bil on shipments of 18.6 million devices against Nokia's revenue of US$9.4bil on shipments of 108.5 million units.

Although Nokia sold 432 million devices last year - more than its three closest rivals combined - its market share continues to fall. At 29% in the first quarter, it's at its lowest level since the late 1990s.

Wait and see
Even more damaging has been Nokia's inability to meet modern challenges of the smartphone market, the lucrative sector in the handset industry, where Nokia used to be the leading innovator.

Although it sold 24 million smartphones in the first quarter, 13% more than in 2010, its share in the sector plunged to 24% from 39% a year earlier.

Nokia has unveiled its N9 smartphone, based on its new MeeGo platform, but the handset received mixed reviews as markets are waiting to see the company's first Windows Phone.

Elop has said that the Windows-based phone will be launched later this year with bulk sales expected in 2012.

In February, Nokia announced a major strategy shift when it partnered with Microsoft Corp, saying it will gradually replace Symbian and MeeGo platforms with the Window-based software that will become the main software used in its cellphones.