Bengaluru based e-commerce giant Flipkart is asking its underperforming employees to either resign or be sent off with a severance pay. This decision would directly hit anywhere between 700-1000 employees. As per reliable sources from top management team of Flipkart, “The clean-up is part of the process of making Flipkart a lean organisation.” From what we hear, such lay-offs are not uncommon in Flipkart as the company is trying to gain more profits and cut costs wherever possible.
Earlier this year Flipkart was in the news for the wrong reasons when it deferred the joining dates of new campus recruits from the Indian Institute of Tehnology (IIT).
In a statement issued by Flipkart, it says that in situations where employees do not make “progress” despite being put on performance improvement plan, “they are encouraged to seek opportunities outside the company where their skills are better utilised. This is a fairly common practice across various industries especially in high performing internet organisations.“
With fierce competition from rival companies along with the need to increase the profit margin, e-commerce companies are trying to find ways to cut costs. As per reports, in April, Flipkart was trying to cut cost by offering less discounts as well as limit the salary increment of its employees. The company is aiming to cut its cost from $80-$100 million to $40 million by the end of the first half of 2016.
In May 2013 too, Flipkart had laid off around 250 employees which was approximately 10% of its total workforce at that time.
It’s not only about Flipkart, but if reports are to be believed another e-commerce company Snapdeal had laid off around 200 of its employees in the month of February 2016.