Flipkart to trim workforce to cut costs

Move to affect 700-1,000 non-performers, or up to 3.3 per cent of its workforce

India’s largest e-commerce player, Flipkart, is downsizing its workforce, as it looks to cut costs and better compete with global rival Amazon. The move will affect 700-1,000 staffers, or up to 3.3 per cent of its workforce, according to a The Economic Times report.

Flipkart, which has come under the gaze of investors for burning cash, is trying to find a balance between growth (to ward off Amazon) and profitability. Recently, the company made several changes to this effect, including increasing margins it charges from sellers.

REACHING A BALANCE

• Flipkart, which has come under the gaze of investors for burning cash, is trying to find a balance between growth and profitability
• With a staff of 30,000 people, it has one of the largest workforces among Indian e-commerce firms
• It has been criticised for over-hiring and locking in top talent

 

At the same time, Amazon has committed to invest a further $3 billion in its India operations over the next few years, aiming to become the leader in India’s e-commerce space. The US firm is estimated to have already edged out local player Snapdeal and is seen as closing in on Flipkart.

However, Flipkart says the downsizing is part of its annual employee performance review, where underperformers are asked to either leave or let go. It claims it loses between one-two per cent of its workforce during this time each year, and it isn’t something to be alarmed of.

“At times, we have employees who do not meet the performance bar. In those situations, we work closely with employees to enable them to improve their performance. In due course, if these employees are unable to make the desired progress, they are encouraged to seek opportunities elsewhere,” said a Flipkart spokesperson.

With a staff of 30,000 people, Flipkart has one of the largest workforces among Indian e-commerce companies.

It has been criticised several times for over-hiring and locking in top talent to win an edge over competition - a highly capital-intensive strategy.

The company has already been shedding flab in its top management, with the exits of Punit Soni, Mukesh Bansal, Ankit Nagori, Manish Maheshwari and several others making news. It has also roped in Kalyan Krishnamurthy, a veteran from investor Tiger Global, to rein in costs and help the company survive the Amazon onslaught.

Last month, Flipkart deferred the placement of fresh recruits from top Indian colleges by nearly six months, citing it was undergoing a major overhaul and couldn’t absorb them just yet. Employees later arranged internships for these candidates with other start-ups, until it was ready to absorb them in December.

Moreover, Flipkart isn’t the only e-commerce player trimming its workforce. In February, Snapdeal sent notices to around 200 of its employees to either shape up or ship out, as it too looked to become more performance-driven, at a time when it was looking to decelerate its cash burn.