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Who will hire former Nokia employees: Will the demand meet the supply?

This blog post probes deeper into the Finnish software sector’s ability to employ the people whose jobs Nokia and its subcontractors will be shedding in the near future. Though Nokia has guaranteed the continuation of work until the end of 2011, many employees particularly from its software suppliers will be on the market much before this time is up. The question then becomes, where will these engineers and managers be headed?

Current numbers put the recently announced direct net (non-outsourced) job cuts of Nokia at about 1,400 in Finland whereas the ripple-down effects on its Finnish subcontractors has been estimated to be around 2,000 jobs. Considering the Nokia-dominance of ICT sector in the country, this is indeed a very significant industry restructuring. On the other hand, having a software SME sector that has been craving for more labor for quite some time creates a very interesting polarity. Hence, will the needs of the SME sector match the skills coming to the market, or in other words, will the demand meet the supply?

The absorbing role of the Finnish software SMEs

The largest software firms in Finland are predominantly service firms, many of which serve Nokia. The net decrease will mostly take part in these firms, though the Finnish branch of Accenture will grab many Symbian developers as part of Nokia's outsourcing deal. Other large multinationals are also moving in to grab their share of the workforce entering the market. For instance Intel has announced it will set up a 200 person Meego development site in Tampere.

Looking beyond large firms, what about Finnish software SMEs? Discussion about their chronic shortage of skilled labor is not a very recent topic. The financial crisis quieted down this talk only briefly, as software SMEs escaped the recession almost without a scratch. Now these companies are hiring on a broad scale. Therefore unsurprisingly, many now believe that this injection of engineers and managers into the job market will be like soothing rain to them.

According to preliminary data in our survey, 164 (53%) of 304 responding firms say that they expect to employ more people by the end of 2011 than at the beginning of the year.  Out of these 164 firms, 41% say that they are likely or very likely to hire employees that are freed up from Nokia and its subcontractors. 

What makes this 41% different from the rest of the firms that are hiring is the topic of the following analysis. By analyzing almost 200 data points per response from our latest questionnaire, a number of preliminary findings came up (p<.05). 

No secret master plan

One could imagine that firms that wish to grow fast through developing new products and have the resources to do so might be more interested in hiring former employees of Nokia and its subcontractors’. Or perhaps Nokia employees have sales and marketing experience in particularly international consumer markets that might be valuable to Finnish software SMEs? 

The data show that there are no systematic relationships of this nature as there are no significant differences in growth willingness, sales, firm age, international sales (except a negative with the tiniest firms), and profitability between firms that are interested in hiring ex-Nokians.  This does not rule out that some companies are taking this approach, but there does not seem to be any noticeable trend. 

However, these firms more often report that a lack of qualified personnel is limiting their growth. This suggests that the willingness to hire ex-Nokians is mainly driven by the need to patch up certain competence areas. Firms that sell development projects faintly seem more interested than other types of firms.

Knowing how large companies work 

Apparently the process and legal experience of Nokia employees comes respected, as the small fraction of firms that plan to IPO in 5 years also were more likely to consider hiring them. Firms interested in Nokia employees generally seem more “professional” than average other company that is recruiting. They more often focus on well-profitable customer segments instead of trying to serve every customer and hack up solutions from miscellaneous components (thanks to the respondents who made it through the last page).  Seeing companies seek employees that match their own culture is not surprising.

Also the knowledge of how a large company works seems appreciated: Companies, despite their size, are more interested in Nokia employees if the typical buyer of their offering has over 250 employees, the deal is over 10k€ or it involves customer-specific development and integration work. For smaller customers and deal sizes, the relationship is negative. This also surprisingly includes consumers though Nokia is a consumer electronics company. 

In search for technical expertise

Looking at the type of technology firms are developing brings out more differences. In the 2011 questionnaire, we asked firms if they are developing software for 20 different platforms now or during next year. When these data are punched through statistical software, the following characteristics about companies with intentions to hire ex-Nokians pop through:

 Firms that develop any embedded software

 Almost every company that does or plans to do Meego development (unfortunately only 3% of respondents)

 65% of companies that develop or plan to develop on Oracle server software

The first two bullets are hardly surprising. The third one is probably explained by interest toward Nokia’s server side Java developers. Another explanation may be ERP experience on the manufacturing side. 

Harder places to look

Nokia’s near absence from the social media scene is perhaps to blame for Facebook development companies being significantly less interested in Nokia employees. The same systematic effect comes through for companies with on-demand (Software-as-a-Service) offerings. Apparently having Java back-end experience is less valuable in this environment. Or perhaps Nokia’s UI and UX design skills are not valued due to the many difficulties the now rebranded Ovi has faced?

Also what stands out is that firms involved or planning iOS and Android development place no special premium on a Nokia job history despite these platforms are exploding in popularity.  This begs the question that is “mobile experience” as a skill as easily transferrable as many think? Perhaps firms see equal value in recruiting young employees and mentoring them to develop for these platforms and in having more mature (and expensive) employees learn these skills? 

The outcome is difficult to predict – no matter what experts say

To conclude this analysis with our preliminary data, it is fair to say that Finnish software SMEs interested in grabbing people leaving Nokia and its subcontractors have very diverse intentions. What seems common to all is that they are after specific technical competences, are more “organized”, and have general experience in serving larger companies. If these characteristics do not match, being a former Nokia employee does not make you stand out from the crowd. Indeed, there even seems to be some Nokia prejudice within the social media and on-demand scene. 

How reality will play out is always a different story; Especially among SMEs, which compose the majority of the Finnish software industry, there is a general trend to be overly optimistic about personnel changes. As we wrote in Kauppalehti a few years back (August 20, 2009), from year to year, about 35% of software SMEs in Finland forecasted that they would increase personnel by the end of the reporting year, but in fact, their personnel count ended up staying the same or even reduced. In a very dramatic way, this means that positive intentions do not always lead to action, which could be bad news compared to the optimistic tone in the media.