 "Twitter shuts down development centre in Bengaluru")
This article has been modified. Please see the clarification at the end.
Amidst increasing scrutiny from investors because of falling revenue growth, micro-blogging platform Twitter has shut its Bengaluru development centre.
While the company has termed this a “normal business review”, the move translates into laying off about 20 employees working at the engineering centre at Bengaluru
The move comes after Twitter missed revenue estimates for the quarter ended June because of lesser than expected advertiser demand, while revenue growth fell for the eighth straight quarter.
It has also issued a weak revenue forecast for the third quarter. Globally, the company is facing stiff competition from larger competitors like Facebook, the reason investors are worried about the company's future.
“Engineering is a key part of our global company and we continue to focus our programs and efforts on improving the core product experience for our users worldwide,” said Twitter on Monday. “As part of our normal business review, we have decided to stop the global engineering work at the Bangalore (Bengaluru) development center.”
“We thank the impacted individuals for their valuable contributions and are doing as much as we can to provide them a respectful exit from our company,” the company said.
The decision is similar to that of Yahoo! India’s, which laid off about 600 employees from its research and development centre in Bengaluru, the second largest outside the US, in 2014.
Analysts said, while the move could be aimed at cutting costs, the company depends on the value added to the overall product from such centres. The Indian development centres may not be adding much value to the core intellectual property (IP) development, which may have led the companies to take the decision to shut down the development work.
“While India is seeing a lot of multinational companies setting up R&D centres, most of the work that happens out of India remains management and maintenance of existing products like patch development and management," said Sanchit Vir Gogia, chief analyst and chief executive officer of Greyhound Research. "The core IP development still happens out of Silicon Valley.”
"It makes sense for a company to develop core IP at the development centre located near its headquarters, because it gives companies control over product development,” he added.
For most big firms such as Apple, Google, Microsoft, SAP and Oracle, the core development happens in Silicon valley.
Twitter, however, said, it would continue to invest in India, which is one of its fastest growing markets.
“Twitter remains committed to India as a strategic market for users, partners and advertisers,” it said. “Today, India is one of our fastest growing markets worldwide and we continue to invest in key initiatives to further expand our audience, increase user engagement and drive revenue.”
Twitter India has operations in Delhi, Mumbai and Bengaluru. While Twitter is putting global development activity out of India on hold, the company is still hiring engineers for hardware-related positions, including infrastructure operations and network operations, according to its website.
WHAT WENT WRONG
- This comes after Twitter missed revenue estimates for the quarter-ended June because of lesser than expected advertiser demand
- Revenue growth fell for the eighth straight quarter, too
- It has also issued a weak revenue forecast for the third quarter
- Globally, the company is facing stiff competition from larger competitors like Facebook, the reason investors are worried about the company’s future
- According to analysts, the move could be aimed to cut costs as the Indian development centres may not be adding much value to the core intellectual property (IP) development
CLARIFICATION
In an earlier version of this article, it was mentioned that the move to shut the development centre at Bengaluru may translate into laying off of a majority of the 100-120 employees based out of the city. The company has clarified that the number of employees laid off are not more than 20. The error is regretted.