Snapdeal aims to trim about 30% of its workforce over the next two months, according to four people aware of the plan at the Gurgaon-based company. The online marketplace plans to drastically cut costs as the Indian e-commerce industry battles slowing growth and a paucity of investors willing to provide fresh rounds of funding.?
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The move is expected to affect about 1,000 employees directly employed by the company in its e-commerce marketplace while thousands of contract workers in the company¡¯s logistics division are also expected to be let off, said the people cited above.?
¡°5,000-odd contract staff employed by the company¡¯s logistics subsidiary Vulcan Express will be pared down as well as about 3,000 people on the rolls of the logistics company,¡± said a company executive and two consultants working with the company.?
In an email sent out to managers within the marketplace operations earlier this week, the company asked them to ¡°right-size¡± their respective teams. With this round of layoffs, the company is expected to let go of about 1,000 from the marketplace.?
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Jasper Infotech, which owns and operates Snapdeal, last raised funds in August 2016 at a valuation of $6.5 billion.
In February 2016, Snapdeal had put over 200 employees on a Performance Improvement Program and eventually let go of the additional staff.?
Jasper Infotech employs about 10,000 people across all operations, including the e-commerce marketplace Snapdeal, payments platform FreeCharge and logistics and supply chain arm Vulcan Express.?
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This estimate also includes over 5,000 contract workers in Vulcan. The CEO of a Delhi-based e-commerce firm said that ¡°Snapdeal is under tremendous pressure to achieve targets similar to last year with 30% fewer resources¡±, adding that his company had seen a surge of resumes from Snapdeal in the past six months.?
¡°The company now has an investor which has suddenly gone cold in India and is looking to right-size operations by reducing discounts, which in turn will reduce orders and requirement of staff,¡± said one of the sources cited above.?
The company¡¯s employee-related expenses rose to Rs 911 crore in FY 2016, up 148% from the previous fiscal. Employee expenses are the largest cost for Snapdeal after marketing and advertising. But unlike the latter, which is a variable cost, wage is a fixed cost.?
For the financial year 2015-16, the company¡¯s total sales grew 56% to Rs 1,457 crore, but losses more than doubled to Rs 2,960 crore.?
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The decision to further reduce its workforce also comes on the back of the company¡¯s decision to shut down Shopo, the Etsy-like online consumer-to-consumer platform for small sellers that it relaunched in 2015, and in which chief executive Kunal Bahl had said the company would invest $100 million.?
Jasper Infotech has been struggling to raise a fresh round of capital. Attempts to raise capital for FreeCharge independently have also not yielded any results.?
The company has seen a series of senior-level exits, including senior vice-president of partnerships and strategic initiatives Tony Navin, senior vice-president and head of the consumer-to-consumer platform Shop, Sandeep Komaravelly and Abhishek Kumar, head of corporate development over the past few weeks.?