After sacking 400 “under-performing” employees in July, the country’s top etailer Flipkart is learnt to be in the process of letting go of 800 more employees.
The e-commerce major plans to “out-place” half of these employees, while the rest will be left to find jobs on their own.
Top-level sources involved in the second round of exits told BusinessLine that the decision to initiate the process was made soon after the first lot of 400 employees were relieved of their duties. However, this time around, Flipkart will handle it in a phased manner; the process has been initiated and will end by December.
The previous round of retrenchment was centred around largely lower-level employees who were handling customer support and operations. The current round will involve employees who are a part of Flipkart’s core 3,200-strong technology and corporate team, who fall in the mid- to high-level salary brackets starting from ₹8-9 lakh up to ₹50 lakh per annum, the sources said.
On being contacted, a Flipkart spokesperson denied that the exits would in such large numbers.
The hardest hit in this round will be taken by Flipkart’s technology team, which has over 1,000 engineers, from the software engineer level to product managers, UI and UX designers. The rest will be employees across the corporate team such as procurement, category leads, among others. The nine-year-old etailer employs a total of 30,000 people.
The timing of these exits is in question, especially given that Flipkart’s Big Billion Sale, the company’s annual blockbuster sale, is around the corner in October, which will require not just the full complement of staff but will see the need for hired contractual hands as well.
“These employees (who are being sacked) were hired at salaries that were 30-40 per cent higher than the industry average, because Flipkart was growing and expanding rapidly at that time. There has been a marked slowdown in GMV growth, which hovers between $4 billion and $4.5 billion, a far cry from the $10 billion GMV projection; there are also no high expectations of a blockbuster Big Billion Sale this October. So, Flipkart is going ahead with the firing,” said one of the sources.
The “out-placed” employees will have to take a huge salary cut with their next placements.
Another indication that Flipkart does not expect a phenomenal response to its Big Billion Sale during the upcoming Diwali season is that it has not hired bikers to augment its delivery team from staffing solutions firm Million Minds. A source in the logistics business said: “Last year, they had hired bikers in June/July, as it is impossible to get them at the last minute for the Diwali sale. This time none were hired.”
Sanchit Vir Gogia, Chief Analyst, Greyhound Research, observed: “This is a right-sizing measure by Flipkart, which most corporates resort to, to cut the extra flab in the organisation when they are under pressure to report better, result-oriented performance for their investors. This was bound to happen and does not surprise me.”