India's largest ecommerce firm Flipkart is downsizing its workforce as it looks to cut costs and better compete with global rival Amazon. The move will affect between 700-1,000 staffers or up to 3.3 per cent of its workforce, according to a report in The Economic Times.
Flipkart, which has come under scrutiny from investors for burning cash, is trying to find a balance between growth and profitability. Recently, the company made several changes to this effect, including increasing the margins its charges from sellers.
Amazon has committed to invest a further $3 billion in its India operations over the next few years, aiming to replace Flipkart as the leader in India's ecommerce space. The US firm is estimated to have already edged out local player Snapdeal and is seen as closing in on Flipkart.
Flipkart says that the downsizing is part of its annual employee performance review where underperformers are asked to leave or will be let go. It claims that it loses between 1-2 per cent of its workforce during this time each year, and that it isn't something new.
''At times, we have employees who do not meet the performance bar. In those situations we work closely with employees to enable them improve their performance. In due course, if these employees are unable to make the desired progress, they are encouraged to seek opportunities outside the company,'' said a Flipkart spokesperson.
With a staff of 30,000 people, Flipkart has one of the largest workforces among Indian ecommerce companies.
It has been criticised several times for over-hiring and locking in top talent to win an edge over the competition.
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 bring down costs and help the company survive the attack from Amazon.
Last month, Flipkart deferred the placement of fresh recruits from top Indian colleges by nearly six months, saying it was undergoing a massive restructuring and couldn't absorb them just yet. It later arranged internships for these candidates with other startups until it was ready to absorb them in December.
Moreover, Flipkart isn't the only ecommerce player to be shedding staff. In February Snapdeal sent around 200 of its employees notices to either shape up or ship out, as it too looked to become more stringent on performance at a time when it was looking to slow down its cash burn.