Flipkart is in the news again for reasons that do not look good. After a report alleged that Flipkart will be laying off close to 1,000 employees, the company responded to NDTV with a statement that described the move as "common practice - especially in high performing Internet organisations".
Sources within the company told NDTV that "300 people, (about 1-2 per cent of the company) are being let go based on performance, and performance alone", denying reports that have claimed the number to be anywhere between 700 and 1,000.
This is particularly shocking as just a month ago Flipkart (and Amazon) were listed amongst the most favoured employers in India. But if you've been paying attention to the e-commerce space, it actually isn't very unexpected.
First, Flipkart got into a heated spat with IIM-Ahmedabad after the e-commerce firm decided to delay the hiring of people that it had selected at campus interviews. Flipkart wasn't the only company to do this either, and it seems that for many tech firms are now risky career options.
In recent times, Flipkart's valuation has also been marked down by its investors, though Chairman Sachin Bansal said valuations don't matter. Of course, that's not the stance most companies take when the valuations are rising - much like how GMV was the most preferred metric for companies (despite a lot of criticism), though it has become "meaningless" now that growth has slowed down.
The big round of layoffs at Flipkart, which was first reported by ET, just further fuels the concerns people have over e-commerce, particularly as this comes soon after rival Snapdeal completed a round of approximately 200 job cuts, which it had started in February. Perhaps making things worse in the eyes of employees losing jobs, this news comes right after Flipkart completed a $70 million (nearly Rs. 470 crore) cash deal for Jabong, a Rocket Internet company that many people have described as being seriously troubled.
In it's official statement however, Flipkart says that the layoffs are just business as usual:
As a performance oriented organisation, we have a transparent evaluation process in place. Employees are assessed in a fair, simple, transparent and development oriented manner. We use our review process to differentiate performance and maintain a high bar, which is reflected in our total rewards philosophy. The top performers are rewarded highly and promoted to the next growth level. The solid performers are accordingly recognised and groomed for future roles through mentoring, coaching and on-the-job learning opportunities. 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 where their skills can be better utilised. This is a fairly common practice across various industries - especially in high performing Internet organisations.
There's plenty of churn at the top level too, with Chief Product Office Punit Soni being one of the high profile executives to leave Flipkart, just a month before his opposite number in Snapdeal, Anand Chandrasekaran also quit. Soni recently tweeted that if there was one company he would invest all his money in, it was Amazon - though he later tweeted that he was speaking about the US market.
For e-commerce companies in India, the pressure is on to start making money, and these layoffs may just the tip of the iceberg.