Nokia Siemens outsources some R&D to IBM

Nokia Siemens will outsource some of its R&D work in Germany to IBM.

Nokia Siemens Networks will hand over parts of some research and development teams to IBM, unloading some of its workforce while continuing to gain the benefit of their expertise, the companies said this week.

As many as 235 Nokia Siemens employees in Munich and Berlin will start working for IBM near the same locations upon completion of the deal, expected by the beginning of December. They will keep doing R&D work for Nokia Siemens on an outsourced basis as well as doing work for other clients of the IBM Global Engineering Solutions division, according to a news release. Financial terms were not disclosed.

Nokia Siemens, launched in April through the combination of Nokia and Siemens' carrier infrastructure businesses, planned from the beginning to cut as much as 15 percent of its workforce within four years. When Nokia reported its second-quarter results in August, it said cost-cutting efforts at Nokia Siemens would accelerate because of weak sales and margins. Nokia said it wanted to achieve cost-cutting goals for 2010 by the end of 2008 instead. Nokia Siemens has said before that shifting R&D operations to partners would be part of its strategy.

The employees moving to IBM represent parts of Nokia Siemens' Next Generation Voice and Multimedia, Media Gateway, Mobile Internet Connections, and Consumer and Business VOIP research teams in its Service Core and Applications Business Unit. They will continue working with product management and other groups at Nokia Siemens while also providing services to IBM and its clients. IBM will protect Nokia Siemens' intellectual property and confidential information when the R&D teams are working on non-Nokia Siemens projects, said Dave Simpson, a vice president in sales and strategic relations in IBM Global Engineering Solutions.

The researchers in Munich and Berlin will work on projects for clients around the world, Simpson said. Their skills complement those of IBM in these areas, he added.

Despite some large ongoing carrier deployments, carrier infrastructure vendors such as Nokia Siemens are under pressure. The consolidation of the industry into fewer, larger carriers such as AT&T and Verizon Communications means they are competing for fewer customers, and growing Asian manufacturers such as Huawei Technologies are increasing price competition.

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