Alcatel-Lucent is planning to cut 10,000 workers by 2015 as the telecom equipment maker continues to restructure.
Back in June, Alcatel-Lucent announced its Shift Plan, which aims to save 1 billion Euros in fixed costs as it retools its operations. However, at the time, it didn’t give an estimate of how many jobs would be cut. Today, the other shoe dropped.
Of the 10,000 jobs that will be cut, 2,100 will come from North America, the company says. At the end of 2012, Alcatel-Lucent employed 72,344 workers worldwide, of which 16,507 were based in North America.
The layoffs, which amount to nearly 14 percent of the company’s worldwide workforce, will largely be in sales, support and administrative areas. IT positions tied to legacy technologies, like 2G and 3G wireless technology, are also expected to feel the pain.
Under the plan, the France-based telecom equipment maker is aiming to reduce its R&D spending on legacy technologies by 60 percent and focus on next-generation IP networking, cloud and ultra-broadband access. It expects to increase investments in next generation technologies to 85 percent of its R&D budget, up from the current 65 percent.
“We launched The Shift Plan in June to give Alcatel-Lucent an industrially sustainable future,” CEO Michel Combes said in a statement. “To carry out this plan we must make difficult decisions and we will make them with open and transparent dialogue with our employees and their representatives. The Shift Plan is about the company regaining control of its destiny.”
Combes, who joined the company in April, is not its first CEO to use layoffs as a means to right the company, which has struggled to obtain profitability for years. Last year, under his predecessor Ben Verwaayen, the company announced it would cut 5,500 positions.
As more businesses turn to the cloud, service contracts for managing networks have become money losers for the company. Earlier this year, it said it is exiting a number of those agreements.
Analysts have speculated Alcatel-Lucent’s cuts could be a move to shrink the company ahead of either spinning off some of its assets or selling itself to competitor Nokia, according to a report in The Wall Street Journal. Nokia, after the sale of its smartphone business to Microsoft, will largely rely on its telecom equipment sales to survive and Alcatel-Lucent could bolster that effort.