eCommerce Major Snapdeal All Set To Fire 30% Of Its WorkForce In Next 2 Months
eCommerce Major Snapdeal aims to trim about 30% of its workforce over the next two months, according to Gurgaon-based company reported to Economic Times.
The report quoted four people aware of the downsizing plan as saying that around 1,000 staff members directly employed by the company will be let off apart from nearly 8,000 contract workers in the online marketplace’s logistics divisions. The company had sent out an e-mail to its managers earlier this week asking them to “right-size” their teams.
“5,000-odd contract staff employed by the company’s logistics subsidiary Vulcan Express will be pared down as well as about 3,000 people on the rolls of the logistics company,” said a company executive and two consultants working with the company.
The move will help them drastically cut costs as the Indian ecommerce industry battles slowing growth and a paucity of investors willing to provide fresh rounds of funding.
Snapdeal is owned and operated by Jasper Infotech, which last raised funds in August last year at a valuation of USD 6.5 billion. In February last year, Snapdeal had put over 200 employees on a Performance Improvement Program and eventually let go of the additional staff.
The company’s employee-related expenses rose to INR 911 crore in the last financial year, up 148 percent from the previous fiscal. Its sales for 2015-16 sales grew 56 percent to INR 1,457 crore, but losses more than doubled to INR 2,960 crore.
“On our journey towards profitability, it is imperative that we continue to drive efficiency in our business, which enables us to pass on the value to our consumers and sellers. As in the past, and like all good companies do, we will continue to assess resource allocation in furtherance of our goals of enhancing customer and seller experience while driving high quality growth,” the company representative wrote.
The CEO of a Delhi-based eCommerce firm said that “Snapdeal is under tremendous pressure to achieve targets similar to last year with 30% less resources”, adding that his company had seen a surge of resumes from Snapdeal in the past six months.The company now has an investor which has suddenly gone cold on India and is looking to right-size operations by reducing discounts, which in turn will reduce orders and requirement of staff,”
The decision to further reduce its workforce also comes on the back of the company’s decision to shut down Shopo. In 2016, eCommerce major Snapdeal had acquired Shopo. The platform allows small and medium-sized businesses to chat, buy and sell on the platform on a zero-commission model.
“These senior-level exits are on account of the executives looking out for better opportunities. The layoffs are primarily directed at mid-level employees and new hires about to complete a year,” said a source.
In an interview to Reuters earlier this week , co-founder and Chief Executive Officer Kunal Bahl said that he expects Snapdeal to turn profitable in the next two years. “I see a relatively clear line of sight to (profit) and we’ve been making great progress in that direction also,” Bahl said. “We needed capital to build the infrastructure which we have, now we have to take control of our destiny.”
Snapdeal’s earnings before interest, tax, depreciation and amortization (EBITDA) for the nine months of the current financial year has improved by about 40 percent from a year earlier, while commissions have grown 3.5 times, he said.