After Nokia, can entrepreneurs and foreign investors revive the Finnish economy?
Microsoft’s partnership with, and later acquisition of, Nokia was meant to save Finland’s economic powerhouse from its burning platform. However, the 2013 acquisition of Nokia’s handset business, completed last April, lacked the intended effect for both parties.
The scale of Finnish job losses
Last week, Microsoft announced a US$7.6bn writedown on the handset unit, which exceeded the US$7.3bn purchase price.
The writedown comes with a further 7,800 job cuts, 2,300 of which are in Finland. This adds to the 12,500 Finnish Nokia jobs lost in last year’s Microsoft reorganization.
In 2001, a report by the Finnish Economic Research Institute said that Nokia had 24,500 employees in Finland, accounting for 1.1% of the country’s total employment.
Although the original report is no longer available on the institute’s site, a copy is available on the Internet Archive.
With the loss of these jobs, and those indirectly supported by the company at the height of its power (cited by the above report at 18-20,000 in the first tier of subcontractors), skilled employment in the country has suffered.
Although overall unemployment remains below 10% and significantly lower than the scale of the problem in Spain, the issue has not easily been resolved.
Only 900 jobs will remain at Microsoft in Finland following this round of cuts, with the surviving jobs focusing on phone engineering and program management.
There remain true Nokia operations outside of Microsoft in Finland, however, as Nokia’s non-handset businesses were not acquired. Nokia therefore remains an independent company, which focuses on network technology, research & development, and its HERE mapping software (itself the product of an acquisition). This business continued to employ 6,855 people in Finland last year, according to the company’s 2014 annual report.
Combining this with the remaining in Microsoft’s ex-Nokia operation, this leaves less than a third of the employees engaged by the company at its peak.
The investment opportunity
Given the continued availability of many of these skilled workers thanks to Finland’s wider economic downturn, the country represents a good opportunity for technology-focused investment.
Not only do these individuals have excellent expertise and experience, but Finland is also among the world’s best-educated societies, fuelling the talent pipeline.
As part of the European union and with 60% of the adult population able to speak English, making it a good base from which to run an international business. The downturn has steadily brought down labour costs as well, which were prohibitively high until recently.
While these resources are available to entrepreneurs with an idea and some capital to hire staff, many existing international businesses are also turning their attention to the Nokia diaspora.
The technical, research and management skills developed during their tenure with the company have made them attractive to these companies, who often find themselves more constrained by a lack of available talent than by a lack of capital. With modern communication technology, this talent can be used without the need for relocation.
In many ways, Finland’s technology industry might evolve to become similar to that in neighbouring Estonia, which has a large pool of talented programmers. The country’s tech scene is perhaps most famous for spawning Skype, and it has long been a favourite location for outsourcing difficult technology work.
How to invest in Finland
Finnish companies need only €2,500 of start-up capital, with a need for one shareholder and two directors. Company names are followed by the word “Oy” to denote their limited liability, and those in the technology sector can benefit from low-interest government loans of up to €1million.
Visit our website to learn more about starting a company in Finland. Alternatively, contact our business set-up experts by writing to