E-commerce giant Flipkart is now facing the heat from the Indian Institute of Management - Ahmedabad after it deferred the joining dates from June to December due to a restructuring exercise, reported The Economic Times. The startup had hired 18 students from IIM-A.
IIM-A sent a strongly worded letter to Flipkart CEO Binny Bansal, asking him to guarantee the jobs of the students and offer a compensation monthly starting June, as against the Rs 1.5 lakh compensation that Flipkart has offered to give as a joining bonus. It has also said Flipkart's move is 'utterly unacceptable'.
IIM-A's placement committee chairperson Asha Kaul has asked for a conference call with Flipkart "where all the relevant stakeholders can engage to reach a mutually acceptable solution", The Economic Times report goes on to add. The letter has been forwarded to various other B-schools to ask if they would be interested to join in on the call.
IIMs are considered a major recruiting ground by companies. The move has potential to hurt Flipkart's recruiting for years to come, says a report in the Livemint. The delay will not only have a negative impact on Flipkart's relationship with IIM-A but with other B-schools as well.
With fund flow into Indian startups narrowing, companies such as Flipkart and Snapdeal have been facing a cash crunch. They are being forced to cut their recruitment to the lowest possible minimum, says an earlier report in the Livemint.
According to the ET report on Wednesday, Flipkart is looking to reduce its burn rate, and is trying to reduce its fixed costs.
An earlier report in the same newspaper had said that Indian startups are gearing up to cut jobs in their pursuit of profitability.
Anil Kumar, chief executive of RedSeer Management Consulting, has been quoted as saying in the report that Startups "are being forced to bring down their operating expenses drastically and look to be profitable at the gross margin level".
Seen in this context, Flipkart's latest move to postpone joining date of new recruits is part of the painful restructuring that the company is undergoing.
Updated Date: May 26, 2016 11:33 AM