According to an ET report, this is not the first time Flipkart has implemented performance-based job cuts. The company has been carrying out similar exercises for the past two years. Additionally, in an effort to control costs, Flipkart has frozen fresh hiring over the past year. Currently, the company is in the process of closing a $1 billion financing round from Walmart and other investors.
Flipkart, excluding its fashion portal Myntra, currently employs 22,000 people. A source familiar with the matter stated that the company is planning to better utilize its resources across both existing and new businesses. The restructuring plans and the roadmap for 2024 will be discussed and finalized at a meeting of senior executives scheduled for next month.
Despite the restructuring, Flipkart has no plans to reconsider its decision to postpone its public offering until 2024, according to sources. In 2022-23, Flipkart had considered launching an initial public offering (IPO), but those plans have been put on hold for now.
An email sent to Flipkart by the financial daily regarding the matter did not receive a response.
Several large Indian internet companies have been rationalizing their teams after significant hiring during 2021, when they experienced high demand for technology services due to the pandemic. Paytm has laid off over 1,000 employees to cut costs and realign its businesses, planning to downsize its workforce by 10-15%. Similar job cuts and business restructuring have also occurred at Flipkart’s US rival, Amazon, and SoftBank-backed Meesho.
Industry experts predict that other venture-funded Indian organizations are likely to make similar moves through 2024.
Flipkart’s proposed restructuring comes at a time when the company is reassessing its existing and new lines of business. Cleartrip, in which Adani Group holds a 20% stake, has reached a gross merchandise value (GMV) of approximately $1.5-1.7 billion. Flipkart plans to invest further in its hotels business, as the travel portal, acquired by the group in 2021, expands beyond airline bookings to include hotels and other travel-related services.
Flipkart has been working on internal synergies for several months, according to sources aware of the changes.
This has become an annual practice now. As part of the appraisal cycle, they (Flipkart) are restructuring teams. Overall, the ecommerce industry, including Flipkart, had its ups and downs in 2023. So, corrections are being made now, said one of the sources mentioned above.
In September of last year, Flipkart merged the key technology and product roles of its new businesses, Cleartrip and Flipkart Health Plus, into the core commerce team to streamline operations.
Read From ET | Flipkart plans for restructuring
In July, Flipkart-owned Myntra cut at least 50 jobs to focus on its top private labels.
While Flipkart has received $600 million in new capital from parent company Walmart as part of the ongoing $1 billion round, senior management is looking to reduce expenses in various categories.