Amid concerns of Indian startups’ financial health, Flipkart – the country’s largest e-commerce firm – put 300-600 employees on a performance improvement plan that might result in layoffs.
“At times, we have employees who do not meet the performance bar. We work closely with them to improve their performance. If these employees are still unable to make the desired progress, they are encouraged to seek opportunities outside the company,” a company spokesperson told HT.
He said the performance plan was part of a regular process that would affect just 1-2% of Flipkart’s 30,000 employees. “This is a fairly common practice across various industries, especially in high-performing Internet organisations,” the spokesperson added.
Market experts differ. “Market correction has impacted e-commerce firms. This is beyond regular attrition. Downsizing cannot be on the back of annual performance reviews. These things are usually planned,” said Sanchit Vir Gogia, chief analyst and CEO, Greyhound Research.
Binny Bansal, co-founder and CEO of Flipkart, is attempting a turnaround. The company has grown by offering discounts and providing logistics free of cost, funded by venture capital money. At its peak, the company was burning $40-50 million a month.
A daily reported that Flipkart’s gross merchandise value (GMV) stagnated at $4 billion last year. GMV is the technical term for value of goods sold without calculating discounts and promotions.
The firm deferred recruiting management graduates a couple of months ago, leading to a backlash. High-profile employees such as Puneet Soni, Mukesh Bansal, Ankit Nagori and Manish Maheshwari, who headed key business units, left.
It lost $5-6 billion in valuation, according to three of its minority investors. The company hopes to achieve a turnaround by realigning, merging and shutting business units.
The spokesperson said there have been no layoffs, and the performance plan has nothing to do with the slowdown in operations.