Shape up or ship out is the diktat from Flipkart to its employees. Around 700 0r 1,000 of them will be soon handed the pink slip, according to ET. They will be either asked to resign or given severance pay.
The slimming down of the workforce is part of the e-commerce giant's bid to build a 'lean' organization, sources told the Economic Times. Flipkart has around 3,000 employees, the report stated, and the company's move to cut down on employees will affect 2.3 to 3.3 percentage of workforce.
In a statement, the company said that employees who do not make progress, despite being put on a performance improvement plan must seek other avenues where their skills can be better utilised, the ET report revealed.
Growth is on the downward curve and many of e-commerce companies are trimming their workforce. With high level exits from Unicorns, lower valuations and a fund crunch staring in the face of start-ups, the once-glowing start-up ecosystem in India is getting grounded with realistic goals.
Snapdeal, too, according to ET, is looking at the record of its performers and around 200 of them were asked to get their act together.
Flipkart put its roadmap in place months ago. In May 2016, Flipkart was in the news for asking campus recruits from IIM-A to defer joining dates due to a restructuring exercise. Flipkart took this decision in a bid to contain its fast burning rate and trim fixed costs, reports stated.
Recent surveys and studies indicating that the funding for start-ups is likely to become a trickle with fund managers tightening the scope and flow of capital was needed, say people in the start-up ecosystem. A joint report by KPMG and CB Insights recently revealed that funding into start-ups has nosedived by as much as 24 percent from the December quarter of 48 percent to $1.15 billion in the first quarter of this year.
The overall trend seen is a slowdown in hiring by start-ups. "The days of hyper-aggressive hiring by start-ups are gone. The mantra now is to hire only when it is very essential. With VCs taking a more cautious approach to funding, and consolidation being the norm across sectors, many start-ups are finding it tough to sustain their hiring levels. Also, with most of them focusing on their burn rates, the trend of hiring highly-paid professionals from bigger companies, or from premium B-Schools and engineering colleges is on the ebb," says Ajay Kolla, Founder and CEO, Wisdomjobs.com.
A number of high level exits have taken place in start-ups. Most of them were asked to go, said Kris Lakshmikanth, chairman and managing director, The Head Hunters India, Bengaluru. He feels this trend will go on till December 2016. This is being reflected with no increase in numbers of CXO-level hiring, he says. “In fact, a lot of start-up executives who came from the old economies are going back to their earlier jobs. The job market is tight. Getting a job is not easy.”
Laxmikanth cites two reasons for it: Some could not deliver on their promises and if they did, it wasn’t accepted by the market; and many were forced to take a cut in salary given the current state of growth of the ecosystem.
While the overall hiring by Indian employers is expected to be around 30 percent to 35 percent, start-up hiring is expected to be around 65 to 70 percent, an analyst said.
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Updated Date: Jul 29, 2016 14:21:39 IST