With the collapse of its ongoing merger talks with Flipkart, online marketplace Snapdeal may witness mass layoffs as the company looks to cut down 80 per cent of its employee strength, media reports said.
According to a report in ANI, the management has given verbal instructions to their department heads to prepare the list.
Additionally, the official also revealed that the owners of the firm have reversed the merger which was to take place between Snapdeal and Flipkart. Rather, with the money from the sale of Freecharge received ($50 million), the firm has decided to sack around 1000 employees out of their present workforce of 1200, and carry forward with the remaining, the report said.
Kunal Bahl and Rohit Bansal have firmly instructed their business and technical heads to restructure their teams and begin the paperwork for their layoff, it added.
Earlier in March, SoftBank-backed Snapdeal witnessed layoffs and said it will eliminate non-core projects to focus on “profitable growth”.
Snapdeal co-founders Kunal Bahl and Rohit Bansal also took a 100 per cent salary cut, while many others at the firm have “proactively” offered a significant reduction in compensation.
In a detailed e-mail to its employees, one of the co-founder, Kunal Bahl conceded that over the last 2-3 years, with all the capital coming into the e-commerce market, the company and the entire industry “started making mistakes”. “We started growing our business much before the right economic model and the market it was figured out. We also started diversifying and starting new projects while we still hadn’t perfected the first or made it profitable. We started building our team and capabilities for a much larger size of business than what was required with the present scale.
Flipkart had reportedly offered USD 900-950 million for the acquisition of Snapdeal but the deal failed to come through. Its largest investor, SoftBank had been proactively mediating the talks for the sale.