Finnish IT services group Tieto plans to cut 1,300 jobs, or 7 per cent of its staff, as it struggles to compete against global rivals like IBM.
The company’s share rose 6 per cent to the highest level in 13 months on the move, which Tieto said will cut annual costs by 50 million euros ($66 million). The cuts will include 500 jobs in Finland, 300 in Sweden, and around 500 elsewhere, the company said.
“Measures this harsh speak for themselves. The competition is tough especially in the Nordic, where competitors have grown through mergers,” Pohjola Bank analyst Hannu Rauhala said.
Tieto’s Swedish rival WM-Data was bought by Logica in 2008 and in Norway EDB acquired Ergo Group in 2010. It also faces fierce competition from International Business Machines and Wipro and other Indian rivals.
Tieto said the move was aimed to lift its operating profit margin to 10 per cent from 5.4 per cent in 2011. It also said it wants to boost earnings per share by more than 15 per cent a year on average through 2012 to 2016.
It will book restructuring charges of around 50 million euros from the job cuts.